Shares in Essar Energy plummeted dramatically in afternoon trading after the group announced that it faced a US$1.24 billion (£807 million) tax bill.

The FTSE 100-listed oil and gas firm lost nearly a quarter of its value as shares fell more than 30 per cent, or 53.70p, to 118.70p at 4pm.

The drop in share price followed the Indian Supreme Court's move to overturn an earlier decision in Essar's favour that would have delayed its payment of a monstrous tax bill to 2021 onwards. It is unclear when the payments will now start.

The decision was specifically related to Essar Oil, a subsidiary of Essar.

In a statement to the Bombay Stock Exchange, the group said, 'Today, the Supreme Court has set aside the judgment of the Gujarat High Court by which Essar Oil was entitled to avail of sales tax deferment scheme, ie, to pay sales tax to the state government in deferred installments.

'The company has availed of approximately INR 63 billion (approximately US$1.235 billion) of sales tax benefit which was to be paid in deferred installments.

'The company will provide further information in the matter after studying the judgment passed by the Hon'ble Supreme Court,' it concluded.