RIL assures SC of paying VAT on sale of gas in UP from Feb 1

 Reliance Industries Ltd (RIL) today assured the Supreme Court that it would start paying Value Added Tax (VAT) to Uttar Pradesh government on sale of gas in the state from February one till a decision by the Allahabad High Court on its plea against the tax imposition.

Taking note of RIL's submission, a bench headed by Justice Altamas Kabir asked the high court to decide expeditiously the company's plea against state government's decision to impose VAT.

The company also submitted that the VAT imposed on its product would be passed on to the consumers.

The court's order came on an appeal by the state government challenging the high court's interim order staying imposition of the tax on the sale of gas by RIL.

The UP government had challenged a July 26, 2011 order of the high court which granted stay on levy of Rs 724 crore as VAT for sale of the gas during 2009-2010.

The Supreme Court had on August 23, 2011 issued notice and sought responses of the Centre.

According to the state, RIL, which is engaged in extracting and refining petroleum and petrochemical products, was supplying natural gas to various fertiliser companies in Uttar Pradesh and, hence ,the state was entitled to levy VAT on the company.

RIL had taken the plea in the high court that the transaction in question is central sale made by it from the state of Andhra Pradesh and it is not liable to pay local tax (VAT) to the state government.