Indian Oil Corporation may have to pay Rs 979 crore to the Uttar Pradesh Government in the next two weeks as the unpaid entry tax. This follows a Supreme Court directive to the company.
The order may have financial implications on the company, Indian Oil said in a statement to the Bombay Stock Exchange. “The matter is also being examined legally for further course of action,” the company said.
Sources said the amount to be paid will have to be re-assessed by the State Government, so it may vary.
The case
The company said the Allahabad High Court had earlier dismissed its writ petition and upheld the U.P. Entry Tax Act 2007, whereby the State was entitled to levy entry tax on crude oil brought into Mathura for refining in Mathura Refinery. IOC then filed a Special Leave Petition in the Supreme Court.
On January 17, the apex court had passed an interim order staying the High Court ruling subject to IOC depositing 50 per cent of the accrued tax liability/arrears under the U.P. Entry Tax Act and furnishing bank guarantees for the balance amount. The amount so deposited / paid and the bank guarantees furnished is however subject to outcome of the appeal in the apex court.
The Mathura refinery's processing capacity is 8 million tonnes a year. IOC's total refining capacity is 65.7 mt a year.
IOC shares fell 6 per cent to Rs 271.45 at BSE on Wednesday, the biggest fall since November 25, 2010. Around 12 per cent of IOC's total refining capacity is situated in Uttar Pradesh.