Essar Oil raises Rs 5000cr via bank loans to pay tax dues

Moneycontrol Bureau

Essar Oil has said it has tied up credit arrangements of around Rs 5,000 crore from Indian banks to pay its sales tax dues of Rs 6,169 crore to the Gujarat government.

The company continues to pursue the matter of repayment schedule of its sales tax liability both legally and with the State Government. Essar Oil is confident that with this facility tied up it will be in a position to meet its entire payment obligations, the company said in a statement.
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Lalit Gupta, managing director and CEO of Essar Oil, said: "The new loan facility will enable EOL to meet its sales tax liability. Our lenders have continued to be very supportive of the business, which remains well placed given the demand for high value fuels both in India and internationally."

Earlier this year, the Supreme Court had rejected Essar Oil's review petition, making it necessary for the company to pay the amount (in excess of $1 billion) in tax levies to the Gujarat government.

The Gujarat government had started taking coercive steps over the last few weeks, seeking its dues. Essar had then approached the Supreme Court again.

Last week, the Supreme Court asked Essar Oil to pay Rs. 1,000 crore to the Gujarat government towards sales taxVAT dues by July 30th.

Essar Oil has already recognised this liability in its quarterly accounts for the quarter ended Dec 31, 2011.