New Delhi: The Supreme Court on Friday stayed a Gujarat high court ruling declining exemption to Essar Oil Ltd from paying value added tax (VAT) on kerosene and LPG.

The Gujarat government had sought to recover nearly 600 crore in VAT from Essar Oil. The Gujarat high court ruling went against Essar Oil’s favour. The interim stay will come as a relief to the refinery.

A bench comprising justices A. K. Sikri and N. V. Ramana said that Essar Oil’s appeal would be heard and admitted its appeal.

The oil refinery claims that state governments cannot levy VAT on products sold under the public distribution system and oil marketing companies selling for domestic use also should be taxed accordingly .

The Gujarat high court, however, declined this exemption to Essar Oil.