Told to pay up Rs.20 Crore registration fee, metro rail contractor moves HC

चेन्नई Chennai (MAS): Gammon India Limited, which along with Russian company OJSC Moscow Metrostroy, is executing two portions of the Chennai metro rail project, has approached the Madras high court against the Tamil Nadu government’s demand to pay a registration fee of Rs 20 crore. According to the government, the company paid a paltry Rs 440 as registration fee.

When the matter came up for hearing on Monday, Justice V Ramasubramanian issued notices, but refused to stay the demand notice, after additional government pleader P Sanjay Gandhi pointed out that the appellate authority in the registration department had upheld the notice and staying it would cause heavy revenue loss to the government.

Gammon entered into two agreements with the Russian company in March 2011 to jointly execute the contracts to be awarded by Chennai Metro Rail Limited (CMRL). While one agreement was for a value of Rs 930 crore, the other was a little more than Rs 1,000 crore. Together they worked out to around Rs 2,000 crore. Holding that they are not construction agreements but mere written guidelines on relations between the two companies, Gammon paid Rs 220 as registration fee for each of the agreements.

During an audit, the accountant general of Tamil Nadu raised objection to the payment. Registration fee at the rate of 1% would work out to Rs 20 crore, and not just Rs 440, it said. The government then slapped a demand on the company.

Denying the allegations, Gammon India said the demand notice had been issued after the limitation period of three years, that too without any jurisdiction. Gammon was not heard before the notices were issued, the petition said, adding that CMRL was not at all party to the agreement, and the registration fee could not be computed on the basis of the value of the construction contract signed by the two parties.

Authorities failed to understand that the agreements were not construction contracts, it said. Holding that Rs 220 each for the two agreements was enough and proper, it wanted the demand notice to be dismissed.