What tax will Reliance pay, apex court asks centre (Lead)

August 23rd, 2011 - 7:29 pm ICT by IANS  

New Delhi, Aug 23 (IANS) The Supreme Court Tuesday asked the central government to specify whether Reliance Industries Limited (RIL) was liable to pay Central Sales Tax (CST) or the local Value Added Tax (VAT) applicable in the state where it was supplying the gas produced from the Krishna-Godavari (KG) basin.

The apex court bench of Justice Altamas Kabir and Justice S.S. Nijjar issued a notice to the central government on a petition of the Uttar Pradesh government, which had challenged the Allahabad High Court’s interim order staying the levy of VAT on the gas supplied by RIL in Uttar Pradesh.

RIL was being levied CST by the centre on the gas produced from the KG basin and that was included in the price of the gas, said senior counsel Harish Salve while appearing for the company.

RIL could not be subjected to double taxation involving both the CST and the VAT, Salve said. The court was told that RIL was being asked by Gujarat and Uttar Pradesh to pay the VAT as applicable in their states.

Salve told the court that RIL was just a contractor and the pricing and allocation of the gas is decided by the central government. He said the CST was inbuilt in the price fixed by the government.

Seeking clarity over the issue, Salve said any tax liability would eventually get passed on to the purchaser of the gas.

RIL is supplying gas to some plants of Kribhco, IFFCO, NTPC, Indo Gulf and Tata Chemicals in Uttar Pradesh.

At the outset of the hearing, the apex court asked counsel for the state government as to why it took six months to challenge the high court’s interim order.

However, the court said that the high court would continue with the hearing on the matter.

The court has given the central government two weeks to file its reply and another one week to all the parties to file their rejoinders.

The matter will come up for hearing after three weeks.

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