ONGC Receives Tax Demand Order on SAED from Central Tax Authority

Oil and Natural Gas Corporation Limited issued a regulatory file to National Stock Exchange of India Ltd. and BSE Ltd regarding disclosure of event or information under Regulation 30 of SEBI (LODR) Regulations, 2015.

Additional Commissioner Central Tax, Vijayawada GST Division, Vijayawada issued an order on October 06, 2025, and raised the following demand against the Oil and Natural Gas Corporation Limited:

1. The authority requests to pay an extra tax called Special Additional Excise Duty (SAED). And demanded amount of Rs. 60,19,053 for goods ONGC moved (cleared) during the month of July 2022.
Reason: This duty is being demanded under specific sections of the tax law (Section 11A(10) of the Central Excise Act, 1944, and Section 147(3) of the Finance Act, 2002).

2. The exemption claimed from payment of SAED in terms of  Notification No. 06/2022-CE dated June 30, 2022, has been denied in respect of the quantity produced by the Production Enhancement Contractor.

3. Interest, at applicable rates, in the amount of SAED confirmed at (1) above in terms of Section 11AA of the Central Excise Act, 1944;

The authority has imposed a penalty of Rs. 60,19,053 of section 11AC(1)(C) of the Central Excise Act, 1944.

The tax department has asked ONGC Rajahmundry to pay for Special Additional Excise Duty (SAED) on crude oil produced by both ONGC and The Production Enhancement Contractor (PEC), PEC is a company helping to increase oil production.

ONGC added that they have already paid Rs. 42,11,673 as SAED for the oil it produced itself.

For the oil produced by the PEC, ONGC says it should be exempt from SAED under Notification No. 06/2022-CE (which gives a tax exemption in certain cases).

However, the department did not accept ONGC’s payment for its own production because it was deposited in the Amalapuram Range office instead of the Gudivada Range (a procedural issue).

It also denied the exemption for the oil produced by the PEC, saying that ONGC is the manufacturer and must pay duty for that production too.

But ONGC believes the demand is wrong because:

• The duty has already been paid, just to a different range office.
• The exemption under the 2022 notification should be applied based on earlier court rulings.
• There was no underpayment, hiding the facts, or intent to cheat, so interest and penalty should not apply.

Considering the Company’s large scale of operations, the impact is not seen as significant. The Company plans to review the order carefully and file an appeal with the appropriate authorities within the allowed time.