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Gujarat HC rejects Essar Oil plea

The Gujarat High Court on Monday rejected Essar Oil Ltd (EOL) plea for relief in repayment of over Rs 8,000 crore due as sales tax deferment liability and directed the state to expedite the recovery.

twitter-logoPTI | June 25, 2012 | Updated 23:13 IST

The Gujarat High Court on Monday rejected Essar Oil Ltd (EOL) plea for relief in repayment of over Rs 8,000 crore due as sales tax deferment liability and directed the state to expedite the recovery.

The division bench of Justice P B Majmudar and Justice Mohinder Pal rejected the petition of EOL which had sought that the company be allowed to pay the tax dues of Rs 6,414 cr in eight yearly instalments and grant it exemption from paying penalty and interest of Rs 2000 crore on it.

Coming down heavily on the EOL , the bench observed that, "The petitioner should have acted as a good company and furnished the amount to the government and not defrauded the state for its commercial benefit."

"The state government is directed to expedite recovery process of the entire amount due," it added.

Court also observed that, ""We fail to understand that why the company (EOL), which had collected sales tax from its customers and invested the said amount in its own project, ask for such benefit on equitable grounds."

Advocate General Kamal Trivedi, while opposing EOL's petition had relied on the Supreme Court's January, 2012 judgement where it was held that the company was not eligible for benefit under the 'Capital Incentive to Premier and Prestigious Unit Scheme 1995-2000' scheme introduced to provide incentives to companies investing more than Rs 1000 crore in Gujarat for its project in Vadinar in Jamnagar district.

During the course of arguments on Monday, company modified its petition and offered that it was ready to pay in six instalments starting from this financial year.

Earlier this year the Supreme Court had upheld Gujarat government's appeal against the company's tax benefit claims.

Subsequently, tax authorities of Gujarat Government had issued a demand notice to EOL for repayment of sales tax deferment benefits utilised by the company. The state government had put the company's tax dues at Rs 8414 crore, which included interest and penalty.


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