Gujarat HC ruling gives Rs 1,000 cr VAT relief to ONGC

In a major relief to government-run Oil and Natural Gas Corporation, the Gujarat High Court today upheld its plea in a dispute with the state which had demanded value added tax (VAT) dues of around Rs 1,000 crore.
A division bench of Justices Akil Kureshi and V M Pancholi passed the order.
The High Court held that the state government was entitled to recovering VAT on the basis of subsidised rates and not on the basis of original rates of the petroleum products sold by ONGC.
The dispute was about whether the state VAT department can recover the tax on the basis of the actual realisation rates. The PSU approached the High Court after the VAT Tribunal here dismissed its plea.

ONGC supplies natural gas to Gas Authority of India from its plant at Hazira in Surat district. It also supplies LPG, kerosene, diesel and naptha to oil marketing companies (OMCs) including Indian Oil Corporation Limited (IOCL).
In 2009, the central government directed ONGC to supply certain products to OMCs at subsidized rates.
However, Gujarat VAT department demanded VAT from ONGC on the basis of actual rates, seeking tax dues of around Rs 1,000 crore.