IndianOil to pay Rs 979 cr to UP toward unpaid entry tax
New Delhi   02-Feb-2012

Cash-strapped IndianOil will have to pay over Rs 979 crore in unpaid entry tax to Uttar Pradesh government in the next two weeks after the Supreme Court asked the company to deposit half of the unpaid liability in cash.

IndianOil had challenged the Uttar Pradesh government decision to levy a $5.78 per barrel entry tax on crude oil the company imported into the state for processing at its 8 million tonne per annum refinery at Mathura in the Allahabad High Court.

"The High Court of Allahabad (on December 23, 2011) dismissed IndianOil writ petition and upheld the UP Entry Tax Act 2007, whereby the state of Uttar Pradesh was entitled to levy entry tax on crude oil brought into Mathura for refining in the Mathura refinery," IndianOil said in a stock market filing.

Subsequently, IndianOil challenged the High Court order in the Supreme Court. The apex court passed an interim order on January 17, 2012, staying the operation of the judgement of the Allahabad High Court subject to "IndianOil depositing 50% of the accrued tax liability/arrears under the UP Entry Tax Act, 2007, and furnish(ing) a Bank Guarantee for the balance amount" within four weeks (by February 14), it said.

"The amount so deposited/paid and the bank guarantees furnished are, however, subject to the result of the appeal," IndianOil said, adding that the matter was being examined legally.

Company officials said IndianOil would be immediately required to pay about Rs 979.17 crore, half of Rs 1,958.34 crore Entry Tax and interest thereon demanded for the period from 1999-2000 to 2007-08. A bank guarantee for the balance 50% would also have to be deposited by February 14.

In addition, IndianOil has to file the tax returns from April, 2008, till now within four weeks (by February 15) and thereafter within 6 weeks of the assessment, pay 50% of the assessed amount by cash (estimated to be Rs 2,300 crore till November, 2011) and the balance 50% through a bank guarantee.