Essar Oil Ltd. (ESOIL) lost a bid to overturn an order that it pay 63 billion rupees ($1.2 billion) in sales tax to the Gujarat state government, with India’s top court today rejecting the request. The shares plunged. There is no legal ground to challenge the verdict, Supreme Court Judges A.K. Patnaik and Jagdish Singh Khehar said in New Delhi today. The unit of London-listed Essar Energy Plc (ESSR) sought a review of the Jan. 17 ruling ordering it to pay sales tax for not finishing the construction of its refinery at Vadinar in the western state before Aug. 15, 2003. Completing the crude oil processing plant before that would have made the refiner eligible to defer the sales tax payment by 17 years. The shares declined as much as 6 percent, the most since March 22, to 56.15 rupees and traded at 57.15 rupees as of 2:12 p.m. in Mumbai. Essar Oil has dropped 9.1 percent since Jan. 16, the day before the court overturned a Gujarat court order that entitled Essar Oil to the tax incentive. Essar Oil has already set aside 40.2 billion rupees toward the liability and is in talks with the Gujarat state government to decide on the terms of the tax payment, according to an e- mailed statement after the petition was rejected. The provision resulted in a loss of 39.9 billion rupees in the quarter ended Dec. 31, the company said Feb. 17. In its petition, Essar Oil argued the refinery was delayed because of a cyclone and a stay order secured by a civil society body. Essar said March 29 it completed an 83 billion rupee expansion of the Vadinar refinery, increasing the plant’s capacity by 29 percent to 375,000 barrels a day. To contact the reporters on this story: Pratap Patnaik in New Delhi at ppatnaik2@bloomberg.net; Rakteem Katakey in New Delhi at rkatakey@bloomberg.net To contact the editor responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net

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