Odisha pulls up Tata Sponge for entry tax dues

The commercial tax wing under Odisha finance department has upbraided Tata Sponge Iron Ltd for deliberately holding back payments of entry tax on scheduled goods purchased from outside the state and import of goods outside the country valued at Rs 774 crore from 2008-09 to 2011-12

"Though you have been admitting the tax payable by you, in the (tax) returns you have not paid any tax on such scheduled goods till date. One such ground made by you is the pendancy of the matter in higher forum for which entry tax is not paid by you. However, on examination it is found that the pendancy of case, cited by you though relates to you, do not relate to the matter at hand", said deputy commissioner of sales tax, Barbil circle in a letter to Tata Sponge Iron Ltd.

The company had earlier communicated that it would initiate payments once the entry tax case in the Supreme Court is disposed off.

Officials of Tata Sponge Iron were not immediately available for comments.

The Tata Group firm has also been pulled up for deliberately delaying payments citing different reasons.

"In many instances you have been citing entirely different earlier pending matters in relation to the present matter which has no connectivity whatsoever," the official said.

The commercial tax officer, however said it would consider the interim payments made by the firm while assessing the entry tax dues for the period as requested by Tata Sponge Iron.

The Odisha Entry Tax Act, 1999 allows the state government to impose a tax, not exceeding 12 per cent of the purchase value, on entry of goods for consumption, use or sale in the state. The government levies different rates for different goods.

About 19 companies including Tata Steel, Vedanta and Essar Steel have contested the decision of the state government citing that it has no jurisdiction to levy entry tax as the Constitution of India does not allow a state government to imposing tax on sale and purchase of imported goods and have moved the Supreme Court after the Odisha High Court rejected their petition in December 2012 and upheld the levy demanded the state government.

In April this year, the Supreme Court had directed the companies to deposit 50 per cent of the state entry tax demand payable on imported plant machinery and raw materials. It had also stayed recovery of penalty imposed by the state government for non-payment of such dues.

Tata Sponge Iron has a sponge iron plant at Bileipada in Joda area of Keonjhar district.

The current capacity of the plant is 0.4 million tonne per annum of sponge iron and 26 Mw of co-generated power.

The plant's modernisation and expansion plans envisage expansion of up to 0.85 million tonne of sponge iron per annum and increasing power generation capacity up to 65Mw. It has also plans to set up a two mtpa steel plant in the area.