SC notice to BG, Reliance Industries, ONGC in Rs 4,000-cr sales tax matter

July 22, 2015
1 min read

The Supreme Court on Monday sought response from British Gas (BG) and two other companies — ONGC and Reliance Industries — on the Gujarat government’s appeal seeking to levy sales tax to the tune of around Rs 4,000 crore on them for bringing gas to Hazira from Panna-Mukta-Tapti (PMT) field, situated on the west coast offshore India.

The state is claiming that sales tax dues of around Rs 4,000 crore are payable between 1998 and 2015 by the three companies, which had entered into the production sharing contract with the government of India for capital investment and exploration.

A bench headed by Chief Justice HL Dattu, while issuing notice to the three companies, refused to stay the Gujarat High Court’s May order that held that gas sales have not taken place within the state and the Gujarat government had no authority to levy the sales tax under provisions of the Gujarat Sales Tax Act, 1969, on the transactions. It also asked the state to refund the amount with interest at 9% per annum deposited by the contractors while seeking interim relief.

The state had assessed sales tax of around Rs 1,500 crore from 1997 to 2001 on the three contractors while stating that the gas was delivered and sold to GAIL from the territorial region of Gujarat.

However, the companies are contesting the demand notices on the ground that the state has no jurisdiction to levy sales tax from them because the delivery point is located 32 nautical miles away from Hazira port in Surat, and hence it does not fall within the territorial waters of India and is also outside Gujarat.

Challenging the Gujarat HC’s order that rejected its stand, the Gujarat government said the movement of goods from the Continental Shelf or Exclusive Economic Zone to Hazira onshore being within the customs frontier is not import into the territory of India and the sales in question are, therefore, chargeable to sales tax under the GST Act. Attorney general Mukul Rohtagi appeared for the state.

According to Gujarat, when the GoI, who is a signatory to the PSC, has specifically stated that the sale has taken place onshore, that is, at Hazira, a unilateral assertion made by the contractors that the sale has taken place on the High Seas cannot be accepted.

The provisions of the Customs Act have been made applicable to the area of Panna and Mukta and by virtue of the notification issued by the central government, the customs frontiers have been extended to Panna-Mukta area and, therefore, for the purpose of the Customs Act, Panna-Mukta is a part of India, it said.

Anything sent to Panna-Mukta from anywhere in the country will not be subject to customs duty as also anything brought from Panna-Mukta to the land area of India will also not be subjected to customs duty. Therefore, the crude and oil produced at Panna-Mukta is considered to have been produced in India, the state government stated.


Previous Story

Government says US return IT professionals need to declare 401k account

Next Story

ITC cannot be denied where registration is cancelled retrospectively–Gujarat HC

Latest from Blog

Income Tax deduction for procurements from MSMEs only upon actual payment

By Shaleen Shah | LinkedIn, assisted by Divyansh Jain Introduction This Note is relevant to computation of income under the head ‘Income from business and profession’. Section 43B of the Income Tax Act provides a list of expenses allowed as deduction, on cash basis irrespective of the year of accounting.

Foreign companies may be required to file Tax Returns in India

by Nexdigm Private Limited as published on Impact of increase in withholding tax on rates for Fees for Technical Services and Royalty As per Indian Tax laws1, payments made to Non-Residents/Foreign Companies for Fees for Technical Services (FTS) and Royalties were liable to tax at the effective tax rate of

How Cryptocurrencies Are Taxed In India

[Source:; Authors: Justin M Bharucha, Aashika Jain] Cryptocurrencies and non-fungible tokens (NFTs) are presently unregulated in India. While the Reserve Bank of India (RBI) had sought to ban cryptocurrencies in 2018, the Supreme Court quashed the attempted ban leaving cryptocurrencies in regulatory limbo – neither illegal nor, strictly speaking,

Higher rate of TDS in certain situations from 1st July 2021

[By Shaleen Shah (Partner), VNCA] Finance Act 2021, has introduced a new section 206AB effective from 1-Jul-2021 wherein a payer/buyer is responsible to deduct TDS at higher rate (i.e. twice the rate as specified under the relevant provision of the Income Tax Act or twice the rate/ rates in force;

Don't Miss

How Cryptocurrencies Are Taxed In India

[Source:; Authors: Justin M Bharucha, Aashika Jain] Cryptocurrencies and

Only 329 startups can claim tax holiday under Startup India

[Source:] Exactly five years since the launch of the