Abandoned Dhenkanal industrial land resurfaces in Rs 679 cr corporate deal

Bhubaneswar: Over a decade after the acquisition of land for an abandoned industrial venture, the villagers of Odisha’s Dhenkanal district are back in the limelight. The same land has now resurfaced in a corporate transaction worth Rs 679.34 crore, raising questions about taxes, the value of the land, and what the public domain is entitled to.

JSW Steel Limited announced to the stock exchanges that it had acquired 100 per cent of Saffron Resources Private Limited. Filings reveal that Saffron, which has shown no income for the past three years, holds approximately 887 acres of industrial land in Odisha. The land was initially acquired in 2010 for a power venture that never saw the light of day and was later transferred to Saffron through an insolvency process.

Although this transaction is structured as a purchase of shares, which is legal and legitimate, it is likely that this route may have cost the Odisha government and the Centre dearly in terms of taxes. While a direct purchase of land would attract stamp duty, registration fees, and capital gains tax, an acquisition of shares could significantly reduce or even defer such outgoings.

Estimates of stamp duty and registration losses are in the tens of crores, although these figures are not independently confirmed. There are also questions about capital gains taxes, since Saffron allegedly acquired the land through the NCLT process in FY 2023-24 for approximately Rs 90 crore.

While no wrongdoing has been alleged, and both companies have complied with SEBI requirements for disclosure, some policy observers contend that significant increases in land value, particularly when land is expropriated from villagers and subsequently transferred via insolvency procedures, warrant further scrutiny from tax and revenue authorities.

For the villagers, the question goes beyond the law. They are puzzled about why land that has significantly appreciated over 15 years has not resulted in a fair share of public revenue or compensation.