Essar Oil loses sales tax case

The Supreme Court has dismissed Essar Oil Ltd's petition against an earlier ruling that denied the company's Vadinar refinery complex permission to make deferred payments of sales tax to the Gujarat government.

The Supreme Court had, in January, turned down a Gujarat High Court judgement that allowed the company to defer sales tax payments to the state government as Essar contested the tax demand, saying the delay in commissioning of the refinery was due to reasons beyond its control.

Essar Oil, a unit of London-listed Essar Energy Plc, will now have to make payment of the full Rs6,300 crore ($1.24 billion) sales tax it deferred till now.

The Narendra Modi government in Gujarat had allowed Essar Energy deferred sales tax payments to the government as part of an incentive for investment in backward areas of the state.  Essar oil had sought permission to defer payment of sales tax till 2021.

Essar Oil, meanwhile, said it has made provision for Rs4,015 crore payment as far back as in the October-December quarter. Essar Oil released its third quarter results a month after the 17 January ruling.

Essar Oil also said it was in discussions with the state government on a way out of the huge tax burden and was confident of working out an arrangement.