Utkal Reporter Bureau|19 Aug 2017
Indian Oil Corporation Ltd (IOCL) and the government of Odisha have agreed upon a formula to bring the ongoing tax dispute between them over the Paradip refinery to an end.
As per the new agreement Odisha government would provide Rs 700 cr per annum to IOCL as loan for 15 years with provision of repayment of the amount without interest by the later after the 16th year onward.
The new agreement is the revised form of the agreement of 2004 between IOCL and Odisha government that had provided IOCL a total deferment of tax payment for 11 years.
Now this is a win-win position for both the parties, said union Petroleum and Natural Gas (PNG) Minister Dharmendra Pradhan through a press conference on Saturday a day after his Meeting with Odisha CM Naveen Pattnaik on the issue.He said,” it is agreed that state government will give Rs 700cr per annum as interest free loan to IOCL for 15 years.”
This will give a substantial amount of additional revenue of Rs 1500 cr per year to the state Odisha, said Mr Pradhan on his twitter post.
“This is a historic day for people of Odisha; dwellers of the state have got their dues without spoiling the industrial atmosphere of the state,” he added.
Following Odisha government demanded IOCL to pay Rs 1465cr as VAT on the sold products of Paradip refinery since sept.2016 the later moved to Odisha High Court challanging the state government’s claim on the basis of the pact signed in 2004 between them. The pact allowed IOCL a deferment of VAT payment for a period of 11 years.
However as per the original agreement IOCL had to set up the refinery in Paradip having annual production capacity of 9 mimt the plant was committed to start production by 2009. But it dragged till 2016 to start production besides it has enhanced its production capacity to 15mmt. Thus encouraging the odisha government to withdraw the financial incentives it had ageed upon to provide to IOCL under the 2004-pact.
As both the parties have reached a solution to the issue they will file a joint petition in the Odisha High Court about their areement.