State to get Rs 1,300 cr as sales tax dues from HAL

The Ministry of Defence on Thursday agreed to give Rs 1,300 crore to Karnataka as part of sales tax dues from Hindustan Aeronautics Limited (HAL).

Chief Minister Siddaramaiah, who met Union Defence Minister A K Antony here to resolve the long-pending tax dispute between the Government of Karnataka and HAL, told reporters that “of the total Rs 2,674 crore dues, HAL agreed to provide Rs 1,300 crore.”

This year onwards, the Karnataka government will impose two per cent sales tax on defence contracts executed by HAL, he said.

Earlier, the Supreme Court directed the Defence Ministry and the Karnataka government to meet and resolve their dispute over sales tax on defence contracts executed by HAL.

The State government directed HAL, which functions under the Defence Ministry, to pay Rs 2,674 crore as value-added tax and sales tax under the Karnataka Sales Tax Act, 1957, and the Central Sales Tax Act, 1956, with respect to transactions between the public sector unit and the Central government, for defence equipment from 1994-95 to 2000-01. However, it was challenged by HAL in court. Then the Supreme Court directed both Karnataka and HAL to resolve the issue amicably.

The chief minister said he had also met Union Home Minister Sushilkumar Shinde to request him to release money under the Calamity Relief Fund to provide relief to areca growers who had suffered a heavy loss of the crop worth Rs 2,700 crore, due to excess rain in the State.