Gujarat can't levy tax in exclusive economic zone: P Chidambaram

AHMEDABAD: The Panna Mukta Tapi oil and crude exploration field falls in "an exclusive economic zone" and the Gujarat government cannot levy sales tax on it, the high court was today informed.

Appearing before the Court as a lawyer for British Gas Exploration and Production India Ltd, senior Congress leader P Chidambaram argued that the exploration field fell in "an exclusive economic zone".

Therefore, the Gujarat government cannot levy sales tax on it, he said, completing his submissions before the division bench of justices Harsha Dewani and Sonia Gokani.

Indian territorial waters extends only up to 12 nautical miles while the delivery point of the company is 32 nautical miles away, he said.

The company (formerly known as Enron Oils) has challenged Gujarat's government demand of sales tax.

It got exploration contract in PMT fields along with ONGC and Reliance Industries in 1990s.

The gas was taken to Hazira, Surat, where after conducting the gas sweetening process, it was sold to GAIL.

The state has demanded Rs 1,500 crore in sales tax dues for 1997 to 2001 period from the three companies, on the ground that they sold gas to GAIL inside Gujarat. All three have challenged the tax levy.