BPCL fined Rs 33 cr on advance tax defaults

Public sector oil and refinery major Bharat Petroleum Corporation (BPCL) has been slapped a penalty of Rs 33 crore by the income tax department (Mumbai) for non-payment of proper advance taxes for 2006-07.

This was first ever notice sent to any company for advance taxes, said an official source.

According to the income tax department, BPCL paid an advance tax of Rs 275 crore for financial year 2006-07 against a provision of Rs 375 crore made in the published accounts of the company.

The company, however, failed to pay a properly assessed advance tax. Usually a company should give a proper reasoning as to why it was not in a position to pay the advance tax. In this case, no such written communication was sent to the department, said sources.

BPCL Finance Director S K Joshi said, "This communication from the I-T department is completely ad hoc. The department has raised the issue without understanding the current oil scenario. We have, however, explained our position to the authorities."

However, I-T officials said that BPCL was the only company defaulting regularly, while other public sector oil companies managed to pay taxes on time. "It causes a great loss to the government as BPCL does not do a proper tax assessment and later paid with interest," said the officer.

Legal experts are of the view that the company could appeal against the move to the I-T commissioner of appeals.

The oil companies are suffering from under-recovery of oil prices. While the global oil prices shot up to record highs, oil companies were unable to pass on the increases to consumers, said an analyst.