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PNGRB levies turnover tax on cos retailing CNG

Last Updated: Monday, September 7, 2009 - 11:49

New Delhi: In an unprecedented move, oil
regulator PNGRB has levied a `turnover` tax on the revenues
companies will earn from retailing CNG and natural gas in
cities, a move that the industry sees as exceeding its

The Petroleum and Natural Gas Regulatory Board (PNGRB),
which as per its enacting legislation has powers to levy fee,
has levied a minimum tax of Rs 2 crore per annum on turnover
that companies like GAIL and Reliance Industries earn from
selling CNG to automobiles and piped natural gas to households
and industries.

As per the Gazette notification, PNGRB has asked entities
to pay Rs 2 crore for turnover of up to Rs 20,000 crore under
the head `other charges`. For turnover of up to Rs 50,000
crore it has levied Rs 2 crore plus 0.008 percent of revenues
in excess of Rs 20,000 crore. For turnover up to Rs 1,00,000
crore it will charge Rs 4.4 crore plus 0.005 percent of
revenues more than Rs 50,000 crore.

Besides, 0.2 percent of capital expenditure during
construction period will be payable by entities, it said.

Petrofed, a body of oil and gas companies, has opposed the
move saying "other charges are similar to levy of turnover tax
or sharing of revenue which are not provided for under the

A new tax can only be levied by the Finance Ministry and
also PNGRB does not have powers to withdraw even a single
penny collected in such charges, Petrofed said.

In a presentation to PNGRB, it said the Board can levy
`other charges` only "against specific service rendered or
goods supplied."

Besides the new tax, PNGRB has notified fee payable by
companies for registration, authorisation and filing

Petrofed said "levy of other charges is not envisaged in
the PNGRB Act." The Act envisages "Government funding of PNGRB
through the Union Budget and as such provides funds for the
Board, therefore levy of other charges is not justified," it

Drawing parallel with the Central Electricity Regulatory
Commission, Petrofed said, "The Electricity Act provides for
reasonable fee structure for various activities (and) no
charge as `other charges` have been levied by the CERC."

"There being similarity in functions related to energy
sector, PNGRB is requested to withdraw provisions related to
`other charges`," it added.

`Charges` means "demand (an amount) as a price for a
service rendered or goods supplied. Thus `other charges`
provision do not conform to the meaning of `charge` when
related to money as no services are being rendered," Petrofed

Bureau Report

First Published: Monday, September 7, 2009 - 11:49
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