Essar Oil has reported a net loss of Rs 3,986 crore in the third quarter mainly due to a heavy tax payment to the Indian authorities.

Essar had reported a net profit of Rs 273 crore in the same period of the previous year.

The Supreme Court of India had put aside a ruling by Gujarat High Court in 2008 and had asked Essar Oil to pay Rs 6,308 crore for a sales tax deferment scheme as the company was not eligible for the scheme. Essar Oil has already filed a review petition with the Supreme court of India.

According to company officials, the company sales tax deferment benefit under the scheme was about Rs 9,100 crore and it has utilized close to Rs6,300 crore. Thus, the company might have to reply the amount as per the schedule that will be prepaed after discussions with the state government of Gujarat or the court.

The company said in a filing with the Bombay Stock Exchange (BSE) that, "The company registered a net loss of Rs 3,986 crore for the third quarter of the current fiscal on account of an exceptional debit of Rs. 4,051 crore towards reversal of sales tax deferral income accounted during May 2008 to December 2011 pending decision on its review petition in the Supreme Court.”