Essar Energy files petition against Indian tax ruling

The India oil subsidiary of energy giant Essar Energy has today filed a petition in the Supreme Court of India to review of the $1.235bn repayment of deferred sales tax.

The Indian Supreme Court ruled against the Gujarat High Court last month in letting Essar Oil pay sales tax in deferred instalments.

That announcement meant that the company would not be able to partake in this scheme going forward.

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The Gujarat High Court in an earlier order had extended time to Essar Oil for commencing commercial production from the Vadinar Refinery, thus allowing the company to benefit from the state's Capital Investment Incentive to Premier/Prestigious Unit Scheme, 1995-2000, Essar said today. The Supreme Court however set aside this decision.

Under the original incentive scheme, the 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.

Essar Oil had already made provision for the repayment of part of the liability which has been assigned to a third party.

Essar Energy owns an 87.1% stake in Essar Oil, which is listed on the Bombay Stock Exchange and the National Stock Exchange of India.

Shares had dropped 3.10% to 122p in early trading on Thursday.

BC