The Supreme Court has rejected the Special Leave Petitions (SLP) filed by the Gujarat Sales Tax Department against GAIL (India) Limited, ending a long-standing legal dispute.
The department had demanded Rs.3,449.18 crore along with additional interest of Rs.1,513 crore, alleging that the transfer of natural gas from Gujarat to other states constituted inter-state sales.
However, the Gujarat Sales Tax Tribunal ruled in favour of GAIL, instructing for reassessment by considering inter-state transfer as branch transfer. The Gujarat High Court also dismissed the department’s petitions against the tribunal’s decision, which led to the filing of the SLPs before the Supreme Court. GAIL has confirmed that the decision will not impact its financial statements.
The case in question pertained to a petition filed by the revenue before the Supreme Court, challenging the Gujarat High Court’s order in TA-493-2018, which had ruled against the state.
In a similar case against ONGC by the Gujarat Tax Department, the assessee was given a favourable verdict by the Gujarat High Court.
In the said case, the Assessing Officer had passed an assessment order on 30.3.2009, stating that the discount given by ONGC to IOC on the sale of petroleum products was not an admissible deduction, and ONGC was required to pay the tax inclusive of such discount with interest and penalty.
The assessee had appealed the decision, but the verdicts were unfavourable. However, in the subsequent appeal filed before the Gujarat High Court, the respondent was successful in availing a favourable decision. The court observed that the Tribunal had wrongly accused the Central Government of restrictive trade practice without demonstrating how it was prohibited under any law.
The court held that the price fixation was never under challenge before the Tribunal and that the question was answered in favour of the appellant and against the Revenue. As a result, the judgement of the Tribunal was reversed, and the appeal of the assessee was allowed.
In addition, GAIL Gas Ltd, the city gas arm of GAIL (India) Ltd, recently reduced the prices of compressed natural gas (CNG) and piped cooking gas in response to a reduction in input gas prices. The company has also stated that it is aligning its pricing mechanism with the Government of India’s guidelines to pass on new domestic gas pricing benefits to its customers. The revised formula and the cap or ceiling price imposed have brought down the price of natural gas from $8.57 to $6.5 per million British thermal units.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
