The company, earlier this month, had given necessary undertakings to the Indian government to indemnify the Indian government against future claims and agree to drop any legal proceedings anywhere in the world.
Moving swiftly towards ending a retrospective tax dispute with a firm that gave India its largest oilfields, sources said, the government has accepted Cairn Energy Plc’s ventures to refund taxes. will allow.
In meeting the requirements of the new law, which eliminates the levy of retrospective taxation, the company has earlier this month Necessary undertakings were given to indemnify the Government of India against future claims as well as agree to drop any legal proceedings anywhere in the world.
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The government has now accepted this and has issued a so-called Form-II to Cairn, which is committed to refund the tax collected to implement the retrospective tax demand, said two sources with direct knowledge of the development. .
After the release of Form-II, Cairn will now start withdrawing all cases in international courts.
Once this is completed, a refund of ₹7,900 crore will be issued to the company, he said, adding that it may take up to three-four weeks to withdraw the cases.
While a Cairn spokesperson did not immediately respond to requests for comments, a senior finance ministry official confirmed the government’s acceptance of the company’s ventures.
Seeking to repair India’s damaged reputation as an investment destination, the government in August filed outstanding claims against telecom conglomerate Vodafone, pharmaceuticals company Sanofi and brewing subsidiaries, now owned by AB InBev and Cairn. A new law has been made to release Rs 1.1 lakh crore. ,
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Around Rs 8,100 crore collected from companies under the repealed tax provision is to be refunded if the firms agree to drop the outstanding litigation including interest and penalty claims. Of this, Rs 7,900 crore is due only to Cairn.
Subsequently, the government notified rules last month that when complied with, the Center would withdraw tax demands raised using the 2012 retrospective tax law and any tax collected in enforcement of such demand would be paid .
For this, the companies were required to indemnify the Indian government against future claims and withdraw any pending legal proceedings.
Cairn said on 3 November that it has “entered into undertakings with the Government of India to participate in the scheme recently introduced by the Indian Law, the Taxation Laws (Amendment) Bill 2021, in which Cairn collected prior Refund of taxes is allowed. India.” Sources said that the undertaking of Cairn given in Form No. 1 under Rule 11UE(1) of the amended Act has been accepted by the Principal Commissioner of Income Tax.
The August law supersedes a 2012 policy that gave the tax department the power to go back 50 years and levy capital gains where ownership changed hands overseas, but business assets were in India.
The 2012 law was used to levy a total tax of ₹1.10 lakh crore on 17 entities, including UK telecommunications giant Vodafone, but of the ₹8,100 crore collected in implementing such demand, only about 98% was from Cairn .
India issued Cairn with tax claims six years ago, and in December 2020 the company won an international arbitration against such demands.
In December the international arbitration tribunal reversed Cairn’s levy of ₹10,247 crore in taxes on India’s 2006 reorganization ahead of its listing, and asked the Indian government to refund the forfeited and sold shares, forfeited dividends and tax refunds. asked for It totaled $1.2 billion, plus interest and penalties.
The government initially refused to honor the award, which led to Cairn moving flag carrier Air India Ltd to US court in May to implement the ruling, including moving flag carrier Air India Ltd to US court for $70 billion in Indian assets from the US to Singapore. was forced to identify. In July a French court paved the way for Cairn to confiscate immovable property belonging to the Indian government in Paris.
Sources said that all these cases will now be dropped.
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