The Supreme Court will decide whether Essar Oil Ltd is entitled to the sales tax benefit under the Gujarat Capital Investment Premier Prestigious Scheme.
If the petition is decided in favour of Essar, it will get the benefit of deferment of sales tax of around Rs 7,000 crore till 17 years.
A bench headed by Justice S H Kapadia today adjourned the matter till next Monday.
The Gujarat government has challenged the Gujarat High Court judgement that directed the state to consider Essar's application for grant of the benefit of deferment of sales tax under the scheme of 1995-2000 and extended the time limit for commencement of commercial production from August 18, 2003 to April 2, 2007.
While stating that the High Court had erred in rewriting the entire scheme of incentives to give benefit to Essar, it said that "financial implication of the incentive of sales tax deferment was an astronomical figure of Rs 6,300 crore.
"The petitioner cannot afford to have such a large amount of sales tax or value added tax deferred for a period of 17 years," said the petition filed through Hemantika Wahi.
It further added that the High Court was not justified in extending the benefit even as the scheme was clear that the benefit would not be granted beyond the stipulated date of commencement of commercial production on August 18, 2003.
According to the state government, to avail of the benefit of sales tax deferment as per the scheme, Essar was bound to commence commercial production by August 15, 2003.
If the state is directed to relax this condition in one such case, then it will set a bad precedent and the petitioner will have to make way in many other cases leading to a huge financial loss, the petitioner added.
