Notwithstanding the rising instances of litigation, JSW Steel has decided to scout for domestic iron ore and coking coal mines to shore up captive sourcing of key raw materials.
The company has recently received show-cause notices from Deputy Director of Mines, Joda-Koira, for alleged loss of royalty, mining premium and other levies of ₹702 crore.
The notices pertain to drop in grade of iron ore mined in the last two years compared with mining plan. The company had earlier claimed that the mining plans are made for 10-15 years and it cannot be validated every two years.
The company has contested the show-cause notice with Revisionary Authority, Ministry of Mines. The Authority has directed the State Government not to take any coercive measures in relation to demand notices until the State government responds to the company’s observations.
GST anomaly
Last September, JSW Steel moved the Appellate authority within the GST department of Odisha against the demand notice of ₹3,004 crore towards tax, penalty and interest on JSW Steel’s subsidiary which operates mines at Nuagoan, Jajang, Koira and Ganua.
The case was due to the anomaly in GST rate whereby the tax on input was higher that of the output goods. The iron ore mining subsidiary company paid 18 per cent GST on premium on mining and when iron ore was sold to the parent companies the GST rate was five per cent. This anomaly was subsequently, corrected by equalising both the GST rates.
However, the First Appellate Authority had confirmed the order passed by the GST Authorities. Aggrieved by appellant order, the company has submitted a Letter of Intent to file an appeal before the Appellate Tribunal.
Jayant Acharya, Joint Managing Director, JSW Steel, said the increase in number litigations involving mines is a cause of concern as it is not good for business and the company expects these issues be resolved.
In the case of Jajang mines, he said the company has got a favourable verdict in revision of MPPA (Mining Plan Preparing Agency) from 9.8 to 7.8 million tonnes which the company was requesting because certain things were included inadvertently, he said.
“We will continue to explore mining opportunities in India even while tackling the issues that crop up as captive sourcing is more cost-effective in the long run and provides certainty,” he added.