ONGC Receives ₹125 Crore GST Demand for Alleged Short Payment of OID Cess
ONGC has received a Rs. 125 crore GST demand for alleged short payment of OID Cess, which the company plans to appeal, stating there was no underpayment
Oil and Natural Gas Corporation (ONGC) received a tax demand of Rs. 124.98 crore along with an equal amount as penalty from the Principal Commissioner of CGST & Central Excise, Mumbai South Commissionerate. The notice alleges short payment of Oil Industry Development (OID) Cess for June 2023. Between October 2022 and May 2023, ONGC had been calculating and paying the OID...
Oil and Natural Gas Corporation (ONGC) received a tax demand of Rs. 124.98 crore along with an equal amount as penalty from the Principal Commissioner of CGST & Central Excise, Mumbai South Commissionerate. The notice alleges short payment of Oil Industry Development (OID) Cess for June 2023.
Between October 2022 and May 2023, ONGC had been calculating and paying the OID Cess based on the Indian Crude Basket Price, which was higher than the transaction value. Later, the company adjusted the excess cess it had already paid while making payments for June 2023.
The tax authority has claimed that ONGC underpaid the cess for June 2023 due to this adjustment, leading to the demand for payment of Rs. 124.98 crore along with interest and an equal penalty amount under the Central Excise Act, 1944, and the OID Act, 1974.
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ONGC has stated that it has correctly remitted the applicable OID Cess, and the cess had already been paid in excess earlier, and the adjustment was legitimate. Interest and penalty should not apply as there was no short payment.
The company said it will review the order in detail and file an appeal before the Central Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai, within the stipulated three-month period.
ONGC clarified that, considering its large operational scale, this tax demand is not expected to have a significant financial or operational impact on the company.
What is OID Cess?
OID Cess refers to the Oil Industry Development Cess, a type of tax levied by the Government of India on crude oil produced domestically.
It was introduced under the Oil Industry (Development) Act, 1974, with the purpose of funding the Oil Industry Development Board (OIDB), which was created to promote and support the growth, development, and modernisation of the oil and natural gas sector in India.
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