Gujarat High Court Order Gives ONGC Rs 1,000-crore Relief On VAT

Oil and Natural Gas Corporation (ONGC) got a relief of Rs 1,000 crore as the Gujarat High Court upheld the company’s plea in a dispute with the Gujarat government. The state government had asked for value added tax (VAT) worth Rs 1,000 crore.

A division bench of Justice Akil Kureshi and Justice VM Pancholi held that the state government could recover VAT only on the basis of subsidised rates and not on the basis of original rates at which the company sold its petroleum products. The state-run company had moved the High Court following dismissal of its plea by a VAT tribunal.

ONGC supplies natural gas to Gas Authority of India Limited (GAIL) from its Surat plant. It also supplies LPG, kerosene, diesel and naphtha to various oil marketing companies (OMCs). The Union government had ordered ONGC to provide certain products OMCS at subsidised rates, but the Gujarat government demanded VAT on the basis of original rates.