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Gujarat asks Essar to repay about Rs 6,300 cr sales tax

The Supreme Court had on January 17 set aside a ruling of the Gujarat High Court that allowed Essar Oil the tax benefit. Salex tax due to be paid was about Rs 6,300 crore as of December.

BT Online Bureau | January 31, 2012 | Updated 14:16 IST

The Gujarat government has asked Essar Oil to repay about Rs 6,300 crore sales tax plus interest accrued, days after the Supreme Court overturned a ruling that allowed the company to defer the payment.

"...subsequent to the decision of the Supreme Court of India on January 17 relating to repayment of deferred sales tax, it (Essar Oil) has received a demand notice from the tax authorities of the Gujarat government for repayment of the full amount of sales tax deferment benefit utilised by the company of approx Rs 6,300 crore, plus interest accrued," Essar Oil said in a statement.

The Supreme Court had on January 17 set aside a ruling of the Gujarat High Court that allowed Essar Oil the tax benefit. Salex tax due to be paid in installments was about Rs 6,300 crore as of December.

"As announced previously, the company is in discussion with the Gujarat government regarding a repayment schedule and is in the process of filing a petition seeking a review of the decision in the Supreme Court," the statement said.

Essar Oil, which is 87 per cent owned by London-listed Essar Energy Plc, has "already made provision for repaying part of the sales tax deferment liability. This liability has been assigned to a third party."

"As of December 31, 2011, the amount assigned is Rs 1,800 crore. This amount is repayment to Essar Oil to meet any payments of the deferred tax benefit in accordance with the terms of the agreement," the statement added.

Shares of the company were trading 2.64 per cent lower in afternoon trade on the Bombay Stock Exchange at Rs 60.95.

- With PTI inputs

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