Bhubaneswar: The agreement to settle the tax dispute between IOCL and the Odisha government on the Paradip Oil Refinery project was approved by the Odisha cabinet chaired by Chief Minister Naveen Patnaik.
Briefing the media after the Cabinet meeting Chief Secretary A P Padhi said as per the settlement the Viability Gap Funding for the Paradeep Refinery Project will be revised to Rs 700 crore per annum payable in four equal installments in each quarter in form of interest free loan for 15 years starting from 2016-17.
For the financial year 2016-17 and three quarters of 2017-18 the Odisha government will provide interest free loan to IOCL by December 2017/January 2018 and every quarter thereafter.
The repayment of amount by IOCL will start in the 16th year from each installment. IOCL will deposit applicable VAT/GST as per law. T
The VAT collected and not paid for 2015-16, 2016-17 and 2017-18 will be deposited by IOCL immediately. IOCL will deposit Rs 2742.37 crore towards withholding of VAT for the tax period between December, 2015 to June, 2017.
The Odisha government shall waive interest of Rs 224.33 crore up to August 31, 2017 calculated at the rate of one per cent per month on Rs 2742.37 crore towards VAT withheld by IOCL for tax period December 2015 to June 2017 and such other interest for the tax period of July up to the date of payment .
The penalty payable by IOCL for the withheld payment for the above period shall also be waived.The tax dispute arose after the state Finance Department issued order on February 22,2017 to withdraw the fiscal incentive to IOCL mentioned in MoU signed on February 16,2004 relating to interest free loan equivalent to sales tax payable to the state on sale of finished products of Paradeep Refinery for first eleven years from the commencement of the commercial production.
IOCL filed writ petition in High Court challenging the state government order. The High Court ordered both parties to resolve their difference through working group chaired by Secretary Ministry of Petroleum and Natural Gas. The working group which met on August 18, 2017 settled the fiscal dispute.