Rajasthan Govt stops work on Cairn pipeline
Cairn India's efforts to raise the nation's crude oil output has hit another roadblock with the Rajasthan government threatening to stop work on a pipeline needed to transport the precious commodity to refiners.
By PTI |
NEW DELHI: Cairn India's efforts to raise the nation's crude oil output has hit another roadblock with the Rajasthan government threatening to stop work on a pipeline needed to transport the precious commodity to refiners, saying it would result in loss of tax revenues to the state.
Though Rajasthan is not opposed to crude oil being taken to refineries outside the state for processing, it fears loss of sales tax, in the form of VAT, revenues if the delivery point of the output from Cairn's Barmer fields is shifted.
The state government has stopped work on giving right of user (RoU) for the pipeline being built to transport the oil to Gujarat coast, official sources said.
Cairn has sought shifting of the delivery point so that the 585-km pipeline needed for transporting the crude to Gujarat coast can be included in the cost for developing the oil field and recovered from the sale of oil.
However, the legal opinion on the matter contradicts the Rajasthan government stand saying any crude oil sale outside the state would be considered inter-state sale irrespective of the delivery point and attract three per cent central sales tax.
Sources said that according to the legal opinion obtained from PwC, any sale that involves the movement of goods from one state to another is an inter-state transaction. Thus, even if the delivery/sale is made in state of origin, but the goods are transported outside state of origin, central sales tax (CST) is payable. The situs of sale is immaterial.
Though Rajasthan is not opposed to crude oil being taken to refineries outside the state for processing, it fears loss of sales tax, in the form of VAT, revenues if the delivery point of the output from Cairn's Barmer fields is shifted.
The state government has stopped work on giving right of user (RoU) for the pipeline being built to transport the oil to Gujarat coast, official sources said.
Cairn has sought shifting of the delivery point so that the 585-km pipeline needed for transporting the crude to Gujarat coast can be included in the cost for developing the oil field and recovered from the sale of oil.
However, the legal opinion on the matter contradicts the Rajasthan government stand saying any crude oil sale outside the state would be considered inter-state sale irrespective of the delivery point and attract three per cent central sales tax.
Sources said that according to the legal opinion obtained from PwC, any sale that involves the movement of goods from one state to another is an inter-state transaction. Thus, even if the delivery/sale is made in state of origin, but the goods are transported outside state of origin, central sales tax (CST) is payable. The situs of sale is immaterial.
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