SC dismisses Essar Oil’s plea for more time to pay sales tax dues

The Supreme Court has dismissed Essar Oil's plea for an extension of time for payment of outstanding sales tax dues of over Rs5,165 crore in Gujarat as the state government has opposed any such extension of the tax that was already overdue.

A bench of justices A K Patnaik and J S Kehar said, "We could have done something but the state government is not agreeing."

The bench also rejected the submission of senior advocate Mukul Rohatgi, appearing for Essar Oil Ltd, that the hearing be adjourned for four weeks.

Essar Oil Ltd had, on 4 October, moved the Supreme Court seeking more time for paying outstanding sales tax dues to Gujarat government as it was facing financial constraints due to economic slowdown.

Also, the company had pointed out that unlike other refineries the government had excluded it from any tax benefits.

Appearing for Essar Oil Ltd, senior advocate Mukul Rohatgi cited a newspaper report to drive home the point that the oil firm has not been given any concession or benefit that has been accorded to companies by the Rajasthan government.

Essar Oil had lost the case on rebate of Rs6,165 crore sales tax dues in January 2012 and the company had paid Rs1,000 crore since before moving the Supreme court.

And, in September 2012, the Supreme Court directed it to pay the remaining tax dues of Rs5,165 crore to the Gujarat government in eight quarterly installments with an interest of 10 per cent, applicable from January 2012.

Essar Oil had said that it has paid Rs2,941 crore of tax dues and Rs756 crore of interest but is now unable to pay the fourth instalment.

The company, meanwhile, reported a net loss Rs71 crore for the quarter ended 30 September, against a net profit of Rs105 crore in the year-ago quarter, although its turnover increased 22.65 per cent year-on-year to Rs25,947 crore in the same period.

Essar Oil Ltd, part of the steel-to-shipping Essar Group, said refining margins declined because of lower domestic demand for diesel.

The company had sought at least three years time to pay the dues against the Gujarat government's demand that the tax dues be paid within six months.

Essar Oil Ltd had moved the Supreme Court after the Gujarat High Court refused any relief to it for making the payment in instalments.

The company, meanwhile, sought a direction by the apex court to the state government not to take coercive steps like locking down the Vadinar refinery, as nearly 10,000 people are employed there.

It had also sought a direction to the state government to form a three-member committee to make recommendations for extending a viability support package to it for ensuring that it continues to function as a growing concern.

''It would be a catastrophe. There are nearly 10,000 employees working in the refinery. This is the only refinery in the country which has not received any incentive or concession,'' Rohatgi said, adding that he was not seeking any rescheduling of repayment of outstanding sales tax dues.