By Bizodisha Bureau, Bhubaneswar, August 18, 2017: In a bid to resolve the impasse over the present tax-dispute between Indian Oil Corporation Limited (IOCL) and Odisha government, union petroleum and natural gas minister Dharmendra Pradhan met Odisha chief minister Naveen Patnaik at New Delhi on Friday.

The meeting between Patnaik and Pradhan to resolve the stand-off on revenue is understood to have ended on a positive note. Though no statement was made by either of the leaders on the outcome of the meeting, both expressed hope to find a solution at an early date.

Talking to media after the meeting, Patnaik said, “We discussed the ways to resolve the IOCL issue and are hopeful of an amicable and positive solution.”

Pradhan said, “We will work out a solution which will be profitable to both the Odisha government and the IOCL,” adding that interest of the State’s people will be safeguarded.

According to the Union Minister, it was important for the state government to incentivise the expansion plans of IOCL to create petrochemical and downstream industries in the state. Over a period of time, it will enable it to increase its revenue and also create additional employment avenues for the youth, he added.

Officials from the ministry and IOCL along with State Chief Secretary and Development Commissioner were present in the meeting, held in Odisha Bhawan at New Delhi.

It was agreed that the officers of the ministry, IOCL and the state government will deliberate various issues and work out an acceptable solution at the earliest, a statement added.

The Odisha government and IOCL had inked an agreement on February 16, 2004 for setting up an oil refinery at Paradip. One of the clauses in the agreement was that payment of the value added tax (VAT) on sale of products of Paradip oil refinery will be deferred until the refinery earns profit.

                               Paradip Refinery

But now as the refinery has started making profits, the State government issued a demand note of Rs 2,745 crore to IOCL on February 27 and directed to repay the same. Besides, the State government is questioning why the IOCL decision to increase its capacity from nine million tonne to 15 million tonne without informing it.

On the other hand, the IOCL, which had collected VAT by selling its products in the State till December 2016 after it  started production on September 22, 2015, is opposing the State government’s demand.

The IOCL had challenged State Government order in the Orissa High Court. A division bench of the High Court on March 16, 2017, had kept the demand notice of the State Government in abeyance and directed the working group comprising officials from the State Government, Petroleum Ministry and IOCL to resolve the issue.