Gujarat high court declines Essar Oil plea on sales tax

The Gujarat high court has turned down a petition submitted by Essar Oil Ltd seeking directions to the Gujarat Government on repayment of sales tax amounting to nearly Rs6,300 crore.

Essar Oil said it is yet to receive a copy of the court order and is looking at options, including an appeal to the Supreme Court to challenge the high court order.

At the same time, Essar Oil said it is also in the process of creating a war chest of $1 billion (over Rs5,000 crore) in case it is liable to pay the tax amount immediately or if the company fails to work out a satisfactory payment schedule.

The Supreme Court had, in an earlier order, on 4 April 2012, "disallowed the company's review petition in relation to deferred sales tax" . The review petition was over the Supreme Court's own decision of 17 January. (See: Essar Oil loses sales tax case)

Essar Oil has already provisioned the sales tax liability in its accounts for the 31 December 2011 quarter.

Essar Oil had, on 7 May 2012, filed a writ petition in the Gujarat high court seeking direction on the repayment schedule of the sales tax and the interest in relation to its sales tax deferral liability to the government of Gujarat.