Government accepts Cairn’s offer on retro tax; to take back the company

Government accepts Cairn’s offer on retro tax; to take back the company

Moving swiftly towards ending a retrospective tax dispute with a firm that gave India its largest oilfields, sources said, the government has accepted Cairn Energy Plc’s ventures to refund taxes. will allow.

Meeting the requirements of the new law, which repeals retrospective taxation, the company earlier this month asked the Indian government to agree to drop any legal proceedings against future claims as well as anywhere in the world. Necessary undertakings were given.

The government has now accepted this and has issued a so-called Form-II to Cairn, which is committed to refund the tax collected to implement the retrospective tax demand, said two sources with direct knowledge of the development. .

After the release of Form-II, Cairn will now start withdrawing all cases in international courts.

Once this is completed, a refund of Rs 7,900 crore will be issued to the company, he said, adding that it may take up to three-four weeks to withdraw the cases.

While a Cairn spokesperson did not immediately respond to requests for comment, a senior finance ministry official confirmed the government’s acceptance of the company’s ventures.

Seeking to repair India’s damaged reputation as an investment destination, the government in August filed outstanding claims against telecommunications conglomerate Vodafone, pharmaceuticals company Sanofi and brewing subsidiaries, now AB InBev and Cairn-owned multinationals. 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Around Rs 8,100 crore collected from companies under the repealed tax provision is to be refunded if the companies agree to drop the outstanding litigation including interest and penalty claims.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 Center would withdraw tax demands raised using the 2012 retrospective tax law and any tax collected in enforcement of such demand would be paid .

For this, the companies were required to indemnify the Indian government against future claims and withdraw any pending legal proceedings.

Cairn said on 3 November that it has “entered into undertakings with the Government of India to participate in the scheme recently introduced by the Indian Law, the Taxation Laws (Amendment) Bill 2021, in which Cairn collected prior Refund of taxes is allowed. India.”

Sources said that the undertaking of Cairn given in Form No. 1 under Rule 11UE(1) of the amended Act has been accepted by the Principal Commissioner of Income Tax.

The August law supersedes a 2012 policy that gave the tax department the power to go back 50 years and levy capital gains where ownership had changed hands overseas, but business assets were in India.

The 2012 law was used to levy a total tax of Rs 1.10 lakh crore on 17 entities, including UK telecommunications giant Vodafone, but only Cairn, around 98 per cent of the Rs 8,100 crore collected to implement such demand. was from

India issued Cairn with tax claims six years ago, and in December 2020 the company won an international arbitration against such demands.

The international arbitration tribunal in December reversed its earlier listing levy of Rs 10,247 crore in taxes on Cairn’s 2006 reorganization of India, and asked the Indian government to refund the forfeited and sold shares, forfeited dividends and tax refunds . This totaled USD 1.2 billion, plus interest and fines.

The government initially refused to honor the award, prompting Cairn to move flag carrier Air India Ltd to a US court in May to implement the ruling, including the transfer of USD 70 billion of Indian assets from the US to Singapore. 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 will now be dropped.

(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is generated automatically from a syndicated feed.)

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