ONGC Videsh says speculations made abroad through auxiliaries or branches or joint endeavors don't constitute benefiting of any serviceNew Delhi: The assessment division has slapped an administration charge interest of over Rs6,100 crore on the abroad arm of state-possessed Oil and Natural Gas Corp (ONGC), a move that may conceivably render its interests in oil and gas fields abroad infructuous.
ONGC Videsh Ltd (OVL) has stakes in 37 oil and gas ventures in 17 nations around the globe. These stakes are held through backups, branches and joint endeavors. For operations of these tasks, those units and joint endeavors would raise an interest for cash on the guardian, OVL, which would transmit the ventures.
The administration charge division now battles that the abroad units are rendering an administration to OVL and all things considered the organization is obligated to pay administration charge at the full rate, sources said.
The office initially issued an interest cum show-cause notice on 11 October 2011 requiring OVL to show bring about why administration charge adding up to Rs2,816.31 crore in addition to enthusiasm on such sum and punishment ought not be requested and recouped.
The assessment sum was figured taking into account outside cash use reported in the organization's money related proclamations covering period from 1 April 2006 to 31 March 2010.
In this manner, five more request cum-show cause notification were issued concealing period to 31 March 2015 to show bring about why administration charge adding up to Rs3,286.36 crore, the enthusiasm on such sum and punishment ought not be requested and recouped from the organization.
The administration charge division, sources said, has fought that the costs speak to business helper administrations rendered by the organization's outside branches and administrator of joint endeavor/consortium to the organization.
OVL however has battled that administration assessment is not payable and is challenging the same legitimately.
As per OVL, speculations made abroad through backups or branches or joint endeavors don't constitute benefiting of any administration. The organization works the ventures at an inward rate of profit for speculations of 12-13% and on the off chance that it needs to pay 14-15% administration charge on such speculations, the undertakings will give negative returns and would get to be infructuous.
Likewise, it fights that administration charge by law can be demanded on administrations rendered inside the nation. What's more, regardless of the possibility that one were to expect that its branches or backups were rendering any administration, they were all abroad and not inside India thus can't be liable to any administration charge, sources said.
OVL had reported a net loss of Rs2,093.5 crore in 2015-16 monetary on a turnover of Rs12,772 crore. It had a net benefit of Rs1,904.2 crore on a turnover of Rs19,148.9 crore in the past monetary. It created 8.916 million tons of oil and oil equal gas in 2015-16 when contrasted with 8.874 million tons in the earlier year.
The general gas generation somewhat expanded from 3.341 billion cubic meters amid 2014-15 to 3.406 bcm in 2015-16 and oil creation was level at 5.51 million tons.