Once again proving the difference between a cooperative and a corporate, IFFCO has promised to continue with supply of fertilizers in the state of Uttar Pradesh. The crisis was averted for the time-being.
Readers could recall the fertilizer cooperative giant IFFCO fell victim to the arbitrary arm-twisting by the Uttar Pradesh which insisted on levying additional VAT. Between IFFCO and UP Govt stands Reliance Industries which is passing the extra-burden onto the fertilizer cooperative.
Defying comprehension, the reliance industries has decided to pay the controversial tax imposed by the UP government on natural gas and transfer the additional costs to customers.
IFFCO is miffed and feels it may have to close down its operations in Uttar Pradesh as it can barely be able to pay the additional costs. Unlike other corporate it hesitates to pass on the extra-burden to its members leading it to a very tough position.
IFFCO has been a party to the petition calling upon the court to stop the UP government from levying the tax.
Levying the VAT on the Reliance gas simply smacks of arrogance on the part of the UP govt, sources say.
The Reliance has argued as it already pays central tax on gas in the AP coast (gas from AP is supplied to the fertiliser plants in UP) it cannot be forced to pay the tax for the same gas in Uttar Pradesh.
Knowledgeable sources say the Reliance has not given up its position on what it dubs a patently unconstitutional double taxation and it would continue to pursue the matter with still greater vigour in the court in the days ahead.