Home >Companies >News >Supreme Court to hear govt plea against Sesa Sterlite merger

New Delhi: The Supreme Court on Monday agreed to hear a central government plea challenging the merger of iron ore miner Sesa Goa Ltd and copper producer Sterlite Industries (India) Ltd.

The income tax (I-T) department and the ministry of corporate affairs say the merger was designed to evade taxes.

A two-judge bench of justices Anil R. Dave and S. K. Singh said the case will be heard for final disposal on 28 April.

Calling the merger a “colourable device", solicitor general Ranjit Kumar, representing the I-T department, told the court that the merger had been between a profit-making company and a sick company such that the profits of Sesa Goa were subsumed in Sesa Sterlite. Kumar said the amalgamated entity had, in fact, sought a revised refund of 1,600 crore from the tax department. As per rules, the I-T department is required to refund an ailing company.

Sesa Sterlite, India’s biggest aluminium maker, emerged from the combination of Vedanta unit Sesa Goa and copper producer Sterlite in an all-share transaction. Investors got three Sesa Goa shares for five shares of Sterlite, while London-based Vedanta transferred to the new entity for $1 its 38.8% holding in Cairn India Ltd, including debt of $5.9 billion. The move, announced in February 2012, cut the parent’s debt as more than half was transferred to the new entity.

Lawyer Harish Salve, appearing for the amalgamated company, contended that the government departments were raising fresh questions of law and ought not to be allowed by the court. The ministry of corporate affairs, represented by additional solicitor general P.S. Patwalia argued that the question whether the I-T department should be heard had been raised before a single judge of the Bombay high court, and was appealed right up to the apex court.

Bloomberg contributed to this story.

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