ONGC Receives ₹22 Crore GST Demand Order by Jodhpur Tax Authorities

State-owned Oil and Natural Gas Corporation Ltd (ONGC) disclosed on Monday, March 17, 2025, that it has received a Goods and Services Tax (GST) demand order amounting to ₹22 crore from the Joint Commissioner, State Tax, Circle C, Jodhpur. The demand pertains to the period between April 1, 2020, and May 14, 2020.

In a regulatory filing, ONGC stated, “An Order, dated 25.02.2025 has been received through email today i.e. 17.03.2025 from the Office of Joint Commissioner, State Tax, Circle C, Jodhpur for the Period of 01.04.2020 to 14.05.2020.”

Breakdown of the GST Demand

The order, issued under Sections 73 and 50 of the Central Goods and Services Tax (CGST) Act, 2017, comprises three components:

– GST recovery demand: ₹11.31 crore

– Interest: ₹9.50 crore

– Penalty: ₹1.13 crore

The total demand of ₹22 crore arises from the alleged non-payment of GST on royalty for other joint venture (JV) partners, Vedanta and Cairn Energy Hydrocarbons Limited (CEHL), who hold a 35% participating interest each in the unincorporated JV for the Pre-NELP block RJ-ON-90/1.

ONGC’s Stand on the GST Dispute

ONGC has been paying GST under protest for its own 30% share in the JV. The company maintains that GST is not applicable on royalty and that it is not liable to pay the tax on behalf of its JV partners. The issue is already under litigation, and ONGC plans to review the order and file an appeal.

In its filing, ONGC stated, “The company is of the view that: (a) GST is not leviable on Royalty and, (b) ONGC is not liable to pay GST on Royalty for other JV partner’s share as per the provision of PSC (Production Sharing Contract) and GST Act. It is pertinent to mention that the question of leviability and shareability involved in this issue is presently under litigation.”

No Significant Financial or Operational Impact

ONGC assured stakeholders that the GST demand order will not have a significant financial or operational impact given the size and scale of its operations. The company reiterated its commitment to challenging the order through legal channels.

“No significant impact in view of the size and scale of operations of the Company. The Company shall review the order and file an appeal before the appropriate forum,” ONGC added in its filing.

Background of the Dispute

The dispute stems from the interpretation of GST applicability on royalty payments in the context of joint ventures. ONGC has consistently argued that royalty payments are not subject to GST and that it is not responsible for paying GST on behalf of its JV partners. The matter is currently under litigation, and the company is confident in its legal position.

Stock Performance 

On March 18, 2025, ONGC share price traded 0.17% higher at ₹230.15 at 9:40 AM (IST). ONGC’s share price reached a 52-week high of ₹344.60, and a 52-week low of ₹215.20. As per BSE, the total traded volume for the stock stood at 0.85 lakh shares with a turnover of ₹1.95 crores.

At the current price, ONGC shares are trading at a price-to-earnings (P/E) ratio of 7.41x, based on its trailing 12-month earnings per share (EPS) of ₹31.03, and a price-to-book (P/B) ratio of 0.88, according to exchange data.

Conclusion

While the ₹22 crore GST demand order poses a regulatory challenge, ONGC remains steadfast in its stance and is prepared to contest the order through legal means. The company’s strong financial position ensures that the demand will not significantly impact its operations. Stakeholders will be closely watching the outcome of the litigation as it progresses.

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