The Supreme Court’s verdict rejecting Essar Oil’s 125% sales tax deferment benefit claim on its investments in its refinery project in Gujarat can prove to be a boom for the finance of the state government.
On Tuesday, the apex court had set aside the Gujarat high court judgment, which had allowed the company to pay Rs 6,300 crore in sales tax liability in deferred installments.
“We have fought the case in the Supreme Court and our stand has been vindicated,” said junior finance minister Saurabh Patel. “The amount involved is over Rs 6,500 crore and will help in increasing spending on welfare schemes and development in the state.”
“We are working out the exact amount to be recovered and we will soon initiate the process of recovery,” he added.
{{/usCountry}}“We are working out the exact amount to be recovered and we will soon initiate the process of recovery,” he added.
{{/usCountry}}According to a senior official in the finance department, if the entire amount is recovered in single installment, it can help reduce state’s borrowing for the next year. “Gujarat’s VAT collection has seen growth over 20% in last few years but it can jump manifold if the Essar Oil amount is recovered,” the official said. “At present, Essar is not paying any sales tax after the high court rules in its favour.”