Tax cases upset Jamshedpur units

Problems with the Jharkhand state commercial taxes department (CTD) have upset major investors in the state like Tata Cummins, Tinplate Company of India Limited (TCIL) and Tata Steel. The last is facing a problem with its cold rolling mill (CRM).

Protracted litigation and disputes before the sales tax commissioners and at Patna and Jharkhand high courts and the Supreme Court have complicated matters.

TCIL said it was yet to receive refund of sales tax paid in 1996-98. Tata Cummins was waiting before the Supreme Court with a sales tax exemption case.

Both companies were awarded sales tax exemption by the Jharkhand High Court, but the state CTD was has moved the Supreme Court. Tata Steel's CRM was also before the Supreme Court.

The Tata Cummins case is now in its seventh year after two references to the High Court and the Supreme Court.

After becoming operational in 1996, Tata Cummins had applied for sales tax exemption under the industrial policy of 1995.

However, the Jamshedpur circle deputy commissioner of sales tax rejected this as the company reportedly failed to produce proper sub-lease papers for the land on which the unit was set up.

The matter went to the Supreme Court, which ordered a stay on the sales tax payment with effect from March 2001.

In March 2003, the joint commissioner in Jamshedpur passed a fresh order against Tata Cummins which went back to the High Court.

In July 2003, the High Court ordered adjustment of sales tax to the tune of Rs 54.50 crore paid during the eight-year exemption period, to expire in March 2004. CTD then filed a special leave petition at the Supreme Court in October 2003.

TCIL filed for sales tax exemption under the 1995 industrial policy but continued paying tax 1998, when it was granted the exemption. In 1996-98, TCIL paid Rs 8.47 crore as tax on purchase of raw materials.

TCIL moved the High Court in 1999 for refund of sales tax paid by it during the exemption period. In 2000, the High Court directed the Jamshedpur circle joint commissioner (JC) to refund sales tax after verifying the sum. The JC ruled only one-third of the tax paid was exempted and the amount was reduced.

TCIL again moved the High Court as its TMBP (tin mill black plate) plant was a new one. It said the one-third refund norm was only applicable for expansion projects and for new plants exemption was 100 per cent. The High Court directed CTD to refund Rs 5 crore out of Rs 8.47 crore as interim relief.

The JC paid up Rs 5.19 crore but TCIL moved the High Court for the entire sum. The High Court rejected TCIL's plea.

TCIL then filed a special leave petition with the Supreme Court and the Jharkhand CTD filed a counter affidavit. The verdict on the case is awaited.

In the case of Tata Steel's CRM, the company applied for sales tax exemption on the ground CRM was a new unit. This was rejected by CTD on grounds that CRM was located within Tisco premises.

Tisco moved Jharkhand High Court, which directed Tisco to pay Rs 22 crore for obtaining statutory forms pending the final judgement.

Tisco then moved Supreme Court, which lowered the amount payable to Rs 10 crore. Tisco again moved the Supreme Court and got an ex-party order exempting the Rs 10 crore payment.

CTD then filed a review petition. The Supreme Court reversed its earlier order and directed Tisco to pay Rs 30 crore as sales tax. Meanwhile, CTD reviewed its figures and demanded Rs 103 crore from Tisco. The matter is being heard.