Essar Energy plc's subsidiary Essar Oil Limited announced that subsequent to the decision of the Honorable Supreme Court of India on January 17, 2012 relating to repayment of deferred sales tax, it has received a demand notice from the tax authorities of the State Government of Gujarat for repayment of the full amount of sales tax deferment benefit utilized by the company of approximately $1.235 billion (INR 63 billion), plus interest accrued.
As announced previously, the company 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 Honorable Supreme Court.
It is expected that it will now take between 60-90 days to complete the discussions with the Government of Gujarat and to complete the review petition with Honorable Supreme Court.
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 $353 million (INR18 billion). This amount is repayable to Essar Oil to meet any payments of the deferred tax benefit in accordance with the terms of the agreement.
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