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Finance Minister Nirmala Sitharaman has hinted that the government will appeal against the recent international arbitration award favouring Cairn Plc, especially as it questioned the country’s sovereign right to taxation. In December, an international tribunal had given an award of $1.2 billion with interest and cost favouring the Edinburgh-based energy major.
Responding to a question from BusinessLine at an interaction with women journalists organised by the Indian Women’s Press Corps (IWPC) here, she said: “The question on India’s sovereign authority to tax cannot be questioned by anybody and even if it is an award of an international arbitration... when it’s about India’s right to tax I will appeal. It is my duty to appeal and as a sovereign nation it is the duty of the government to question that.” “So an arbitration award to question the authority of the government to even tax... I am sorry I will appeal on that,” she said.
The Finance Minister was asked to comment on the so called retrospective taxation and the fact of such provisions remaining in the income tax statute becoming an important reason (bone of contention) for foreign investors’ hesitation in bringing more money into the country.
No impact on FDI flows
However, Sitharaman felt that retrospective taxation has not impacted the FDI sentiment and this was corroborated by the fact that FDI inflows are now at their highest levels. “We have made our position clear as regards retrospective taxation and it has been repeated over 2014, 2015, 2016 and till today. On that score, I cannot see any lack of clarity,” she said.
Sitharaman’s remarks on appeal are significant as this is the first time there is a formal confirmation from the government on its intent to appeal against the international arbitration award in the Cairn matter.
On crypto...
On whether a digital currency will be introduced by the government or the RBI, Sitharaman said there is a Supreme Court decision on digital currency. “We have been in discussion with the RBI. When things develop and we can announce, I will let you know,” she said.
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