Essar Oil, the Indian subsidiary of FTSE 250 energy group Essar, has had its petition concerning the repayment of deferred sales tax disallowed.
Essar filed a petition back on February 16th to review the repayment of $1.235bn of deferred sales tax after the Indian Supreme Court ruled against the Gujarat High Court in letting Essar Oil pay sales tax in deferred instalments. This has been rejected by the Supreme Court of India.
Under the original incentive scheme, Essar's Vadinar Refinery was required to start commercial production by August 15th 2003, "but the actual commencement of commercial production was after this date," Essar admits.
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The company assured that it has already recognised this liability in its quarterly accounts for the quarter ended December 31st 2011 and today's order has no new impact on the business. It is now in discussion with the government with regard to finalising the repayment.
"Essar Oil is also in discussions with banks for meeting the repayment obligations as may be finalised with the Government of Gujarat," the company said.
Shares were down 3.61% at 154.9p shortly after the announcement on Wednesday.
BC
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