Last month, Cairn agreed to drop litigation to confiscate Indian assets after it accepted the Indian government’s offer to retrospectively settle a tax dispute related to the imposition of the tax.
Britain’s Cairn Energy plc has dropped lawsuits against the Indian government and its entities in the US and elsewhere, and is in the final stages of withdrawing cases in Paris and the Netherlands, approx. 7,900 crore is to be withdrawn. tax demand.
As part of the settlement of a seven-year-old dispute with the government over the recovery of past taxes, the company – now known as Capricorn Energy plc – has withdrawn lawsuits filed in several jurisdictions to enforce an international proceedings have been initiated to take The arbitration award that reversed the levy of ₹10,247 crore retrospective taxes and ordered India to refund the money already collected.
Two sources with direct knowledge of the matter said that on November 26, Cairn withdrew the suit brought to Mauritius for recognition of the arbitration award and took similar measures in courts in Singapore, the UK and Canada.
On 15 December, it sought and received the ‘voluntary dismissal’ of a suit brought in a New York court to confiscate Air India’s assets to recover money owed from the government. That same day, he made a similar move in a Washington court seeking recognition of the arbitration award.
Recognition of an arbitration award is the first step before any enforcement proceeding, such as forfeiture of property, is initiated.
Sources said the crucial litigation in a French court, which had attached Indian properties on Cairn’s plea, is in the final stages of withdrawal. The paperwork is expected to be completed in the next two days.
The attachment of Indian properties, including some flats in Paris used by Indian government employees in July, quashed a 2012 amendment to the Income Tax Act that gave taxpayers the right to go back 50 years and change ownership wherever There was a capital gains levy. Hands were abroad but trading assets were in India.
The tax department used a 2012 law to levy ₹10,247 crore tax on alleged capital gains made on restructuring its Indian business before Cairn was listed in 2006-07.
Cairn opposed such demand saying that all the taxes due at the time of restructuring, which were approved by all the statutory authorities, were duly paid.
But the tax department in 2014 attached and later sold the remaining shares of Cairn in the Indian unit, which was acquired by the Vedanta group in 2011. It also withheld tax refunds and forfeited dividends on account of settling part of the tax demand. All this totaled ₹7,900 crore.
Sources said the paperwork to withdraw a case in the Netherlands is also in the final stages.
Last month, Cairn said it had agreed to drop litigation to confiscate Indian assets in countries ranging from France to the UK after it accepted the Indian government’s proposal to settle the tax dispute retrospectively .
Meeting the requirements of the new law, which repeals retrospective taxation, the company has given the Government of India the necessary undertakings to agree to waive any future claims as well as any legal proceedings anywhere in the world.
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. ,
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 government would withdraw tax demands raised using the 2012 retrospective tax law and that any tax collected in enforcement of such demand would be paid .
For this, companies will have to pay damages to the Indian government against future claims and withdraw any pending legal proceedings.
Cairn had given such an undertaking and is now withdrawing the case.
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 .
An international arbitration tribunal in December 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 value of the forfeited and sold shares, forfeited dividends. Gone and the tax refund was withheld. This totaled more than $1.2 billion in 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 are being dismissed one by one.
,