SC dismisses petitions filed by Gujarat Sales Tax Department against GAIL

New Delhi: State-owned GAIL (India) Limited said in a regulatory filing on Wednesday that the Supreme Court on Monday dismissed Special Leave Petitions (SLP) filed by Gujarat Sales Tax Department against GAIL. The Gujarat Sales Tax Department had raised a demand for Rs 3,449.18 crore and interest of Rs 1,513.04 crore treating the transfer of natural gas from Gujarat to other states, as inter-state sales, during the period from April 1994 to March 2001.

The judgment will sizably reduce contingent liability of GAIL

Further, the filing also noted that "the Hon'ble Supreme Court has not interfered with the order passed by the Hon'ble Gujarat High Court, as such impugned order dated 28.04.2023 does not have an impact on the Company." It also added that "the judgment pronounced in favour of the Company will sizably reduce the Contingent Liability of the Company. The Company protested the demand of Rs 49,620 million raised by the Sales Tax Department of Gujarat State."

Background

"The Gujarat Sales Tax Tribunal passed the order in May 2005 in company's favour and gave instructions for reassessment, considering inter-state transfer as branch transfer. Thereafter, Gujarat Sales Tax Department filed petition before the High Court Gujarat against the order of the tribunal and the court further dismissed the petitions. Thereafter, Gujarat Sales Tax Department filed Special Leave Petitions (SLP) before the Supreme Court against the order of the High Court. Now, Supreme Court vide order dated 28.04.2023 has dismissed the SLP," the company said.

High Court's order

The order by High Court said, "Sales Tax Department has raised a demand of Rs.3,449.18 crore and interest thereon Rs 1,513.04 crore in respect of Hazira unit in Gujarat, treating the transfer of natural gas from the State of Gujarat to other states, as inter-state sales, during the period from Apri/1994 to March 2001. Based on the direction of Hon'ble Supreme Court of India in the special writ petition filed by GAIL, the Gujarat Sales Tax Tribunal passed the order in GAIL's favour and gave instructions for reassessment, considering inter-state transfer as branch transfer. The Sales Tax Department had filed a rectification application under section 72 of the Gujarat Sales Tax Act, 1969 with the Gujarat Sales Tax Tribunal which was dismissed by the Tribunal. Thereafter, the Sales Tax Department had filed petitions before the Hon 'ble High Court Gujarat against the order of the Tribunal and the same was pending as on 31.03.2018. The Hon 'ble High Court Gujarat vide Order dated 31.07.2018 has dismissed the petitions filed by the Gujarat Sales Tax Department."

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