Govt reaches out to Cairn, other companies

Shishir Sinha New Delhi | Updated on August 08, 2021

Among the tax disputes, the one with Scotland-based Cairn has been the most contentious one   -  Getty Images/iStockphoto

Hopes to end all disputes and pay refund by fiscal-end

The Finance Ministry will reach out to companies such as Cairn Energy and Vodafone to settle disputes under the new taxation law amendment Bill as soon as it gets the Presidential assent. It also hopes to end all disputes by the end of current fiscal.

“Among the four main companies which are to get refund, Cairn is the largest one and it is already in touch with the government. Still, we will communicate to it about the new law. We will also talk to the other three,” a senior Finance Ministry official told BusinessLine. On Friday, Lok Sabha approved a Bill to amend the Income Tax Act 1961 and the Finance Act 2012 to end retrospective taxation.

Income tax demand had been raised in 17 cases. In two cases, assessments are pending due to stay granted by the High Court. Of the 17, four are key cases involving Cairn (which paid ₹7,880 crore as tax), New Singular Wireless (₹119 crore), WNS Capital (₹47 crore) and Vodafone (₹44.74 crore).

Cairn tax dispute

Among these four, the case related with Scotland-based Cairn has been the most contentious one. The Hague-based Arbitral tribunal pronounced its award on December 21, 2020 in favour of Cairn Energy Plc and Cairn UK Holdings Ltd (CUHL). It asked India to pay Cairn an award amount of $1,232.8 million plus interest and $22.38 million towards arbitration and legal costs. In March this year, India filed an appeal against the ruling.

However, in May this year, the company filed a lawsuit in a US Court against Air India to enforce award. Then in July, a French court passed an order to freeze certain Indian Government properties in the case pertaining to Cairn Energy. In the beginning of this year, Cairn moved courts in the US, the UK, the Netherlands, Canada, France, Singapore, Japan, the UAE and Cayman Islands to get the award registered and recognised. This was the first step before it could eek seizure of the Indian government assets.

Another important case relates to the Netherland-based Vodafone International BV which won an award against India on September 25, 2020. Here too, the Government has filed an appeal in Singapore.

The Bill lays down that demand already raised will be ‘nullified’ but with the condition that the companies concerned withdraw all mentioned legal suits. Once they submit the declaration, the government will refund the amount paid in these cases without any interest thereon. The official is hopeful of positive response from the companies involved.

“We hope that the entire matter will be settled and the refund made by the end of this fiscal,” he said.

Published on August 08, 2021

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