SC asks Essar Oil to pay R5,189-cr tax dues with 10% interest to Gujarat govt

Written by Indu Bhan | Indu Bhan | New Delhi | Updated: Sep 14 2012, 08:25am hrs
The Supreme Court on Thursday asked Essar Oil to pay R5,189 crore towards its tax liability with 10% interest in eight quarterly installments, starting January, to the Gujarat government.

A bench headed by Justice AK Patnaik, while disposing of the companys plea, said that the principal amount will have to be paid in eight quarterly installments on reducing balance in two years from January 2 next year.

The interest on the principal amount has to be paid from January 17, 2012, the date of the judgment pronounced by the apex court.

Essar had earlier sought a five years time period for payment of the balance amount.

The apex court in January had held Essar ineligible for sales tax deferment under an erstwhile Gujarat Capital Investment Premier Prestigious Scheme of 1995 for its R1,900-crore Vadinar plant in Jamnagar district. Since the refinery started production later than the specified time, the government had held the company ineligible for the benefit.

The company had already paid R1,000 crore towards its sales tax dues of R6,189 crore to the state government in July. But it had refused to pay the interest saying that ...the amount in question is repayable to the state government not under any regular assessment of sales tax but because of the HC judgment which held that the company was not entitled to the benefit of the sales tax deferment benefit under 'Capital Investment Premier/Prestigious Unit Scheme, 1995-2000, Essar had said in its petition filed through counsel Mahesh Agarwal.

The state government had earlier attached three bank accounts of Essar Oil in a bid to expedite the process of recovering sales tax dues of more than R8,200 crore, including interest towards deferred tax liability. Attachment had taken place after the High Court had rejected Essar Oil's plea seeking to pay the tax dues of in eight yearly installments and exemption from the penalty and interest of over R2,000 crore. The HC had also allowed the state government to collect the taxes quickly.