The
Gujarat government in the late 1990s had issued a policy
allowing sales tax deferment of sales tax/VAT up to a certain
amount but in any event not beyond the 17 years on projects
meeting certain investment eligibility criteria, like
investment of more than Rs1,000 crores. Projects of Reliance
Industries Ltd and Essar Oil Ltd’s refinery were among the
eligible investments for this scheme. However, in case
of Essar Oil, the Gujarat government rejected the deferment
benefit on the ground of delay in commencement of production
at its project. Essar Oil had contested the same.
The
Gujarat High Court order, whilst ordering grant of the Sales
Tax/VAT deferment, has curtailed Essar Oil’s deferment
benefit by over Rs1,000 crore on the basis that the Gujarat
government’s infrastructure development in the region and
the surrounding areas of the project, in the interim, may have
benefited Essar Oil.
The
Gujarat High Court has directed the state government to issue
the Final Eligibility Certificate within one month.
Under
the scheme, the deferred amount of sales tax will be recovered
by the sales tax department from Essar Oil in six equal annual
instalments beginning from the financial year subsequent from
the year in which Essar Oil exhausts the limit of sales
tax/VAT deferment granted to it or after the expiry of the
relevant period of time limit during which deferment is
available, whichever is earlier.
Essar
Oil was represented by their Counsel Shri KS Nanavati,
assisted by advocates KD Gandhi and Kunal Nanavati, and the
state government was represented by the Advocate General Kamal
Trivedi.
So
