No tax relief for Petronet at disputes committee

NEW DELHI: Petronet LNG cannot get the kid glove treatment public sector units get in litigation on taxation matters. Though four PSUs hold 50% equity in the listed company, Petronet does not qualify for settlement of its tax disputes at the Committee of Disputes.

Whenever there is a dispute between two government departments or between a government department and a PSU, the matter is referred to the CoD for resolution. The committee is a secretary-level dispute resolving body, headed by the Cabinet secretary. But as per rule, only those PSUs in which government shareholding is above 51% qualify for approaching CoD.

The subject had surfaced in the case of Petronet in a tax adjudication, in the Mumbai Income Tax Appellate Tribunal. The tribunal had directed for CoD’s permission as PLL’s shareholding is very unique. Four PSUs — Indian Oil Corporation, Oil and Natural Gas Corporation, Gas Authority of India and Bharat Petroleum — each hold 12.5% stake in the company, while another 33.66 % is held by Indian public and the rest 16.34% by institutions.

The finance ministry had accordingly sought the opinion of the ministries of law and company affairs as directed by the Cabinet secretariat. But both the ministries have held that Petronet will have to approach ITAT directly and it cannot go to CoD as an option.

A similar view was recently held in the case of Maruti Udyog Ltd which too is no longer is a public sector unit after government divested its stake in it. On the same lines, Indraprastha Gas Ltd also cannot avail of the CoD route.