Essar Energy hit with $1.235bn tax charge

Indian energy firm Essar Energy has learnt that it must repay, in full, $1.235bn in sales tax, in addition to interest.

The news comes after the firm received a demand notice from the tax authorities of the government of Gujarat following a decision by the Supreme Court of India over the repayment of deferred sales tax.

The company said it is in discussion with the government of Gujarat regarding a repayment schedule and is in the process of filing a petition seeking a review of the decision in the Supreme Court, which is expected to take between 60-90 days to complete.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

In a statement the company said: "As has been made clear in previous disclosures, Essar Oil has already made provision for repayment of part of the sales tax deferment liability. This liability has been assigned to a third party."

"As of December 31 2011, the amount assigned is $353m. This amount is repayable to Essar Oil to meet any payments of the deferred tax benefit in accordance with the terms of the agreement. Essar Energy will make a further announcement when more detail becomes available."

NR