Essar Oil's bank accounts sealed | business | Hindustan Times
Today in New Delhi, India
Oct 23, 2017-Monday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

Essar Oil's bank accounts sealed

Taking the first step in recovery of more than Rs 8000 crore sales tax liability recovery, the Narendra Modi government on Monday seized three bank accounts of Essar Oil. The government's action came following the Gujarat high court division bench direction asking the state authorities to expedite the recovery process form the company.

business Updated: Jul 09, 2012 16:30 IST
Mahesh Langa

Taking the first step in recovery of more than Rs 8000 crore sales tax liability recovery, the Narendra Modi government on Monday seized three bank accounts of Essar Oil. The government's action came following the Gujarat high court division bench direction asking the state authorities to expedite the recovery process form the company.


"We have seized the three accounts of the company for recovery of the sales tax dues," said D Thara, special commissioner of commercial tax, Gujarat.

On June 25, the division bench of Justice P B Majmudar and Justice Mohinder Pal rejected the petition of Essar Oil Ltd (EOL) which had sought that the company be allowed to pay the tax dues of Rs 6,414 cr in eight yearly installments and grant it exemption from paying penalty and interest of Rs 2000 crore on it.

While dismissing the plea, the court observed that, “The petitioner should have acted as a good company and furnished the amount to the government and not defrauded the state for its commercial benefit."

"The state government is directed to expedite recovery process of the entire amount due," the bench observed, adding, "We fail to understand that why the company (EOL), which had collected sales tax from its customers and invested the said amount in its own project, ask for such benefit on equitable grounds."

Earlier in January this year, the Supreme Court had rejected company's plea seeking sales tax deferment benefits under a special state government scheme -- the Capital Investment Incentive to Premier/Prestigious Unit Scheme, 1995-2000.
Essar Oil was eligible for a tax deferment incentive of up to Rs 9,100 crore (Rs 91 billion) for 17 years, provided the company would start commercial production from its proposed unit within a specified timeframe.

The company was building a 9-million tonne per annum crude oil refinery at Vadinar in Gujarat, was supposed to complete it by April 2003, to qualify for sales tax incentives.

However, it failed to meet the deadline and the project was put into operation only in 2006, thus making it ineligible to seek the tax incentives under the government policy.

Following the SC order, tax authorities of Gujarat Government had issued a demand notice to EOL for repayment of sales tax deferment benefits utilized by the company.

The state government had put the company's tax dues at Rs 8414 crore, which included interests and penalty against which the company has approached the high court seeking rescheduled of the payment and also exemption from the interests and penalty.