ONGC requested to pay 60 lakh as penalties for alleged discrepancy in excise responsibility cost of Rajahmundry asset

State-owned explorer Oil and Natural Gas Company (ONGC) knowledgeable Tuesday that the Vijayawada GST division has imposed a penalty of approx. ₹60 lakh in lieu of their alleged underpayment of particular further excise responsibility (SAED). This tax demand accrues to their Rajahmundry asset in Andhra Pradesh and for clearances effected in July 2022. It knowledgeable the exchanges that the corporate can be reviewing the order and shall file an enchantment throughout the prescribed cut-off dates. Additionally, it acknowledged contemplating the dimensions and scale of their operation, the influence “is just not thought-about vital”.

Issues regarding non-reconciliation

The oil explorer underlined the first concern pertains to non-reconciliation of the tax demand for the crude oil it had produced and that of a separate manufacturing enhancement contractor (PEC) in the course of the interval. For perspective, the latter pertains to agreements whereby the contractor is required to lift output and improve restoration from depleting or mature oil fields.

According to ONGC, it had already paid ₹42 lakh for the amount it had produced itself and sought exemption of the approx. ₹18 lakh, for the amount produced by the contractor, as per related provisions again then. However, the state-owned explorer acknowledged, the tax authorities “disregarded the cost” made in the direction of their very own manufacturing underlining that the explorer paid it to a unique zonal division of the excise division. Thus, a case of non-reconciliation.

Additionally, the corporate knowledgeable that the exemption profit too has been denied, treating ONGC because the producer for the amount of the PEC as nicely.

Describing the demand as “unsustainable”, it stated, “There is neither any quick cost of responsibility nor any suppression or intent to evade responsibility; therefore, the demand on account of curiosity and penalty is just not sustainable.”

ONGC’s Rajahmundry Asset is unfold throughout 4 districts of Andhra Pradesh, particularly, Krishna, Dr. B.R. Ambedkar Konaseema, East Godavari & West Godavari.