Monday, January 23, 2012

Indian Court:Essar Oil Dealt Tax Blow By Indian Court

The Supreme Court in India has put aside the judgement of the Gujarat High Court that dominated in favour of Essar Oil's claim to advantages underneath a sales tax deferment theme within the state of Gujarat.

Under the state incentive theme, Essar Oil was permitted to defer sales tax payments up to a price of USD1.78bn in relation to its Vadinar Refinery project, on the condition that the refinery begin production no later than 2003. However, the refinery project was beset by delays and production failed to begin till 2008.

The state government then argued that Essar Oil was now not entitled to learn from the tax deferral theme, a call that was successfully challenged by Essar in Gujarat's High Court. However, the state court's ruling was overturned by the Supreme Court on January seventeen, sending Essar's shares plummeting and effectively wiping over GBP500m (USD780m) off the market worth of Essar Oil's London-listed parent company, Essar Energy.

In a statement issued following the Supreme Court ruling, the corporate said: "Essar Oil would really like to clarify that the sales tax deferment profit to Essar Oil was a loan repayable within the earlier of the year 2021/22 or on exhaustion of the complete eligible quantity, that the corporate had expected to occur within the year 2013-14, and was repayable in six equal annual installments."

It went on to feature that: "The company’s estimate is that the whole quantity of the sales tax deferment profit was INR9,100 crore (USD1.784bn). up to now Essar Oil has utilised approximately INR6,300 crore (USD1.235bn) of this profit underneath the sales tax deferment theme. Following the Supreme Court order, any compensation schedule is predicted to be mentioned and finalized with the State Government of Gujarat and/or be subject to court agreement."

It remains unclear whether or not Essar are going to be ready to attractiveness the ruling.
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