New Delhi, May 18: After ITC, it’s the turn for Gail (India) to breathe a huge sigh of relief.

The gas PSU has won a major sales tax case in Gujarat with the appellate tribunal setting aside a tax tab of Rs 4962 crore.

The order upholds the stand taken by Gail that the transportation of natural gases from Gujarat to other states amounts to a stock transfer and is not an ‘inter-state sale’.

The judgment by the tax tribunal will considerably reduce the contingent liabilities on the gas producer. The dispute arose over a sales tax demand by the Gujarat sales tax department for the period 1994-95 to 2000-01.

The state government had claimed that the transmission of gas to other states amounted to an inter-state sale and was therefore taxable.

Gail argued that it carried the gas out of the state under its ownership and transferred the ownership at the custody transfer point. Thus, it was a mere stock transfer.

The case had earlier come up before the Supreme Court, which then transferred it to the state tribunal on the ground that the issue did not involve a pure question of law.

After verifying the process involved in the transmission of gas, the tribunal has set aside the sales tax demand.

Gail carries almost 85 per cent of the gas from Gujarat to other states and, thus, would have been crippled by the sales tax blow if it had been allowed to stand.