BG celebrates $230m PMT gas sales tax ruling

Vol 18, PW 19 (21 May 15) People & Policy

BG, Reliance and ONGC could soon be celebrating after winning a major Rs1500cr ($236m) gas sales tax dispute with the Gujarat government which has dragged on for 11 years in the Gujarat High Court.

But state authorities aren't taking their defeat lightly and plan to challenge the Panna, Mukta and Tapti partners in the Supreme Court. At issue is sales tax owed on gas supplied from the Panna and Mukta fields to GAIL from 1998-2002.

In a lengthy 196-page judgement delivered on May 8, a division bench of justices Harsha Devani and Sonia Gokani accepted arguments from leading tax lawyers led by India’s former finance minister P. Chidambaram on behalf of BG, Reliance and ONGC.

“In light of the arguments the petitions succeed and are allowed,” says the order. “As the sales in question have not taken place within Gujarat, the state has no authority to levy sales tax under the provisions of the GST Act on the transactions in question.

” The judges quashed and set aside all assessment orders and notices issued by the sales tax department. “We’re studying the judgment to understand its implications,” a sales tax department source tells this report.

“But it’s becoming increasingly clear we must approach the Supreme Court.” Sales tax officials have also been ordered to refund Rs200cr ($32m) paid by BG, Reliance and ONGC as VAT at 4% while the case was pending.

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