Supreme Court notices to Centre, others on RGTIL’s transfer plea

Supreme Court notices to Centre, others on RGTIL’s transfer plea

The Supreme Court on Monday issued notices to the Centre and others as to why the petitions against the Petroleum and Natural Gas Regulation Board’s order in November last year on “virtual transport” of liquefied natural gas should not be transferred from the Delhi High Court to it.

PNGRB had directed Mukesh Ambani firm Reliance Gas Transportation Infrastructure (RGTIL), the owner and operator of the East West Pipeline (EWPL), to provide open access on a ‘virtual reverse flow’ basis to the GMR Energy’s pipeline system for transportation of gas from Gujarat (West) to Andhra Pradesh (East).

On a transfer petition moved by RGTIL, a bench headed by Justice J Chelameswar sought replies from various parties, including the ministries of finance and chemicals and fertilisers, PNGRB, GMR Energy, Tata Chemicals and other fertiliser companies.

It also tagged RGTIL’s transfer plea with another similar petitions filed by Reliance Industries challenging the PNGRB’s order that allegedly exposed the Mukesh Ambani firm to conflicting demands from different central and state tax authorities having “substantial financial consequences” (of around R600 crore).

This, as per RIL petition, would change the nature and character of transactions and alter the gas supply purchase agreements (GSPAs) between it and the buyers, including IFFCO, Tata Chemicals, National Fertilisers, Gujarat Narmada Valley Fertilisers, Nagarjuna Fertilisers and Chemicals, etc.

Seeking transfer of the two petitions, RGTIL said that the appeals pending before the SC also involve the decision of the principle on which tax was to be imposed on gas being transported from the point of origin (in AP) and delivered to buyers within and outside the state of origin, i.e., the circumstances in which CST or VAT would be payable on the same (State of Uttar Pradesh vs RIL).

Both the Fertilizer Association of India (FAI) and RGTIL had alleged before the Delhi High Court that the board’s decision to allow swapping of gas supply between its Kakinada-based plant and the west coast-based GMR Energy’s plants was against the guidelines of swapping transactions issued by the petroleum ministry in 2011, and the “national policy for supply of gas”. The HC in January this year had stayed the board’s order.

Senior counsel Paras Kuhad, appearing for RGTIL, said that one of the problems in this arrangement was the uncertainty it would involve in the taxation of the sale of gas.

“In the case of a swap, the character of the transactions of sale of gas would stand modified from inter-state to intra-state sales with the effect that in place of Central Sales Tax of 2%, AP VAT at the rate of 14.5% would be imposed on the same,” RGTIL stated.

GMR Energy had filed a complaint that RGTIL, operating a common pipeline, was not providing it open access to transport natural gas.

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