Reliance threatens to stop gas supply to UP fertiliser units over sales tax row

Reliance Industries Ltd (RIL) has threatened to stop gas supply to four fertiliser units in Uttar Pradesh amidst a row over sales tax payment.

RIL has asked the fertiliser units to immediately make provision in their financial guarantees for payment of sales tax or face stoppage of gas supply from tomorrow.

Fertiliser plants belonging to Indo Gulf Fertiliser, IFFCO, KRIBHCO, Shyam Fertilisers and Tata Chemicals face suspension of gas supply from 6:00 hours tomorrow unless they furnish guarantees for any sales tax claims that may arise from an interstate dispute.

While these fertiliser units in UP use RIL gas as an input, sales tax for the gas is paid at the point of sale at Gadimoga in Andhra Pradesh. The gas then is transported to the fertiliser units in Uttar Pradesh. The UP government has challenged this and wanted the sales tax to be paid in UP, where, according to them, the actual sales take place.

In fact, the UP sales tax authorities have moved the Allahabad High Court, only to get a stay on their demand. The state government has gone to the Supreme Court against the Allahabad HC's order.

That being the legal position, RIL on 1 October served notice of suspension of supplies to fertiliser plants belonging to the four companies in UP.