Ahmedabad: The Gujarat government on Monday froze three bank accounts of Essar Oil Ltd (EOL) in Jamnagar following Gujarat High Court directives to expedite recovery of over Rs 8,000 crore in sales tax dues. "Three bank accounts of EOL have been frozen in Jamnagar district as part of the due recovery process," a top finance department functionary said.
The division bench of Justice PB Majmudar and Justice Mohinder Pal last month had rejected the petition of EOL, which sought that company be allowed to pay the tax dues in installments and also grant it exemption from paying penalty and interest on it.
The court had directed Gujarat government on June 25 to expedite recovery process of the entire amount due. This followed Supreme Court in January stating that EOL was not entitled to defer payment of sales tax, an incentive offered by the Gujarat government for the company to start production at its Vadinar refinery in the state by August 15, 2003.
Since the deadline was missed, the company lost right to defer sales tax payment by 17 years.
EOL expressed "surprise and disappointment" at the Gujarat government's decision to attach its bank accounts saying it had clearly stated that it intends to pay Rs 6,169 crore dues.
"As a statement of its bonafide intent, Essar Oil has already agreed to pay Rs 1,000 crore within 30 days to the Gujarat government towards the sales tax liability," the company said in a statement.
"Essar Oil has written to the state government requesting that a committee be formed which can jointly discuss the modalities of the payment of the balance principal amount of Rs 5,169 crore and consider a remission of the past interest of Rs 1,932 crore," the statement said.
Following the court directive, Gujarat finance department issued a demand notice to EOL for repayment of sales tax deferment benefits utilised by the company.
The state government had put the company's tax dues at Rs 8,091 crore, which included interest and penalty.
EOL said its request for remission of interest amount was based on the fact that it sought the sales tax scheme benefit only after the Gujarat High Court verdict in its favour in April 2008 and that no interest amount was mentioned in the Supreme Court order.
"Essar Oil has repeatedly made its intent to pay clear once the Supreme Court verdict was announced," it said, adding the company had on April 5 submitted a detailed payment schedule, which was rejected by the state government.
"The reason Essar Oil has requested an installment based payment scheme is because the company embarked on a major capital expansion scheme since the sales tax scheme mandated 50 per cent of the collected amount to be re-invested. Hence, it is not possible to make the payment in one single installment as demanded by the state," the statement said.
The company said it was "clearly the aggrieved party" despite making an investment of over Rs 25,000 crore in the Vadinar refinery and a total of Rs 1 lakh crore investment in Gujarat.
"Despite attempts to clarify and share the schedule repeatedly, the state government officials on Monday visited our bankers and refinery in connection with the recovery of sales tax dues," Essar Oil said.