Post News Network
Bhubaneswar, Sept 13: The state government may lose over `2000crore in 2016-17 fiscal
due to deferment of value
added tax (VAT) to Paradeep oil refinery.
Commercial tax commissioner Saswat Mishra stated this in a letter to state additional chief secretary (finance) R Balakrishnan Monday suggesting that such deferment will lead to huge revenue loss to the state.
“It is apprehended that deferment of VAT to Indian Oil Corporation Ltd (IOCL)’s Paradeep oil refinery will exceed `2,000 crore in 2016-17,” Mishra said in his letter, adding, “The deferment availed by IOCL unilaterally is in violation of the provisions of the OVAT Act.”
According to Mishra, the revenue loss Orissa will incur this fiscal due to VAT deferment constitutes a whopping 11.42 per cent of the total commercial tax collection target of `17,500crore set by the state government for 2016-17 fiscal and thus “cannot be compensated by any other means.”
Notably, the government had signed a MoU with the IOCL in February 2004 agreeing to give tax concession to the firm for 11 years from the date of commencement of commercial operations of its refinery inaugurated this February 7.
However, the state government is of the contention that since the corporation failed to set up the refinery on time as promised in the MoU, by delaying its commissioning by three years, certain clauses of the 2004 pact stands null and void and the firm is now availing the deferment ‘unilaterally’ which is against the state’s tax law.
The Centre has constituted a committee to look into the state’s concern over waiver of VAT.
Meanwhile, the commercial tax commissioner has requested the additional chief secretary (finance) to take “necessary action” in this regard to overcome the revenue loss.