- Friday, April 19, 2024
By: Chandrashekar Bhat
BRITAIN’S Cairn Energy Plc has dropped lawsuits against the Indian government and its entities in the US and other places.
It is also in the final stages of withdrawing similar cases in Paris and the Netherlands to get back about Rs 79 billion (£790 million) collected from it to enforce a retrospective tax demand.
The move is part of the settlement the company reached with the government to the seven-year-old dispute over the levy of back taxes.
Now known as Capricorn Energy Plc, it has initiated proceedings to withdraw lawsuits it had filed in several jurisdictions to enforce an international arbitration award which had overturned the levy of Rs 102.47 billion (£1.02 bn) retrospective taxes and ordered India to refund the money already collected.
Two sources with direct knowledge of the matter said Cairn on November 26 withdrew the lawsuit it had brought in Mauritius for recognition of the arbitration award and took similar measures in courts in Singapore, the UK and Canada.
On December 15, it sought and got ‘voluntary dismissal’ of a lawsuit it had brought in a New York court to seize assets of Air India to recover the money due from the government. On the same day, it made a similar move in a Washington court where it was seeking recognition of the arbitration award.
Recognition of arbitration award is the first step before any enforcement proceedings like a seizure of assets can be brought.
A critical lawsuit in a French court, which had attached Indian properties on the petition of Cairn, is in the final stages of withdrawal, the sources said. The paperwork is expected to be completed in the next couple of days.
The attachment of Indian assets, including some flats in Paris, in July used by the Indian government staff, had triggered the scrapping of a 2012 amendment to the Income Tax Act that gave the taxman powers to go back 50 years and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India.
The tax department had used the 2012 legislation to levy Rs 102.47 bn (£1.02bn) in taxes on alleged capital gains Cairn made on the reorganisation of its India business before its listing in 2006-07.
Cairn contested the demand saying all taxes due when the reorganisation, which was approved by all statutory authorities, took place were duly paid.
But the tax department in 2014 attached and subsequently sold the residual shares that Cairn held in the Indian unit, which was in 2011 acquired by Vedanta group. It also withheld tax refunds and confiscated dividends due to it to settle part of the tax demand. All this totalled Rs 79 bn (£790m)
Sources said paperwork for withdrawal of a suit in the Netherlands too is in the final stages.
(PTI)
