NEW DELHI : British oil explorer Cairn Energy Plc said Tuesday that it is seeking $ 1.4 billion from the Indian government (roughly ₹10,300 crore) in losses arising from the expropriation of your investments to enforce a retroactive tax lawsuit.
In its semi-annual income statement, the company said it expects an international arbitral tribunal to issue a decree shortly on its challenge to the Indian government that seeks ₹10,247 crore in retrospective taxes.
“The main evidentiary hearing of Cairn’s claim under the Treaty (of Bilateral Investment between the UK and India) took place in August 2018 in The Hague with a final hearing in December 2018. All hearings have already been held and formal submissions and the tribunal is in the process of drafting its award, “the firm said.
The tribunal, he said, has indicated that it “expects to be in a position to render the award after the end of the summer of 2020, with no significant delay expected as a result of COVID-19.”
Cairn said it seeks “full restitution for losses of more than $ 1.4 billion as a result of the expropriation of its investments in India in 2014; continued attempts to enforce retrospective tax measures; and failure to treat the company and its investments fairly and equitably. “
This is the second most prominent retrospective tax litigation. Last week, an international arbitration tribunal ruled that India’s efforts to claim ₹Rs 22.1 billion in past taxes from the Vodafone Group violated fair treatment under the bilateral investment protection pact between the South Asian nation and the Netherlands.
Cairn, which gave the country its largest oil discovery, received a notice from the income tax department in January 2014, raising a preliminary assessment of ₹Rs 10,247 crore tax liabilities related to the group reorganization in 2006.
In addition, the department added the company’s nearly 10% stake in its former subsidiary, Cairn India.
Cairn Energy had sold Cairn India to Vedanta in 2010-11. Following the merger of Cairn India and Vedanta in April 2017, the British company’s stake in Cairn India was replaced by a stake of around 5% in Vedanta issued alongside preferred shares.
In addition to seizing its shares in Vedanta, the tax department seized dividends totaling ₹1,140 million rupees owed to him from these shares and ₹Tax refund of 1,590 crore against the claim.
Cairn Energy in 2015 initiated an international arbitration to challenge the retroactive taxes.
Pending final award, the tax department sold most of Cairn Energy’s shares in Vedanta to recover some of the tax demand.
“Based on detailed legal advice, Cairn is confident that he will be successful in this arbitration and therefore no provision has been made for any of the taxes or penalties imposed by the Income Tax Department of India,” he said. signature on Tuesday.
The Treaty, he said, provides robust provisions to enforce a successful award and a decision by the Tribunal under the terms of the Bilateral Investment Treaty is binding on both parties.
“The Group also has legal advice confirming that the maximum amount that could ultimately be recovered from Cairn by the tax department, in excess of the assets already seized, is limited to the value of the assets (of the company), mainly the common shares. remaining in Vedanta Ltd with a value of 3.3 million as of June 30, 2020. “
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