Essar Oil on Wednesday said it was mulling the option of filing a review petition against the Supreme Court ruling, which held that the Ruias-promoted company was liable to pay deferred sales tax to the Gujarat Government.
“Essar Oil is examining all legal options and it expects to file a review petition in the Supreme Court,'' the company said in a statement here.
The statement said Essar had availed itself of Rs.6,308 crore as on December 31, 2011, under a special scheme of the Gujarat Government, which had granted deferment of sales tax for 17 years for construction of the 9-million tonne refinery at Vadinar.
Following this court ruling, Essar Oil shares tanked by over 22 per cent to one-year low of Rs.44.80 during intra-day on the BSE. The stocks, however, recovered some losses and closed the day at Rs.51.40, still down 11.53 per cent.
The case pertains to a special Gujarat Government scheme, under which the refiner was eligible for a sales tax deferment for 17 years, running into an incentive of up to Rs.9,100 crore, provided the company starts production within a specified period — April 2003.
Although Essar Oil failed to meet the deadline as it started production only in 2006, the company was granted exemption under the scheme, the Capital Investment Incentive to Premier/Prestigious Unit Scheme — 1995-2000. Later, the arrangement was revoked by the Gujarat Government and the matter went to the Gujarat High Court, which ruled in favour of Essar. This was challenged by the State Government in the Supreme Court, which held that Essar was liable to pay the deferred sales tax as it failed to meet the deadline of making the refinery operational.
Essar said the sales tax deferment liability had been fixed and as on December 31, 2011, it was Rs.1,800 crore. “This amount is repayable in accordance with the terms of the agreement. Following the apex court order, any repayment schedule is expected to be discussed and finalised with the State or the Court,'' it said.
It also clarified that the case was not for sales tax exemption but was only for deferment of payment of sales tax. The company is also in talks with lenders for exiting the corporate debt restructuring (CDR) scheme, the statement said. “The process of exiting the CDR is expected to be completed shortly. There is no event of default under the financing arrangements,'' the statement added.