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<ul><li><keyword id="64469" type="General" weightage="20" keywordseo="Cairn" source="Orion">Cairn</keyword> Energy has accepted the Indian government's $1 billion <keyword id="12044719" type="General" weightage="20" keywordseo="refund-offer" source="Orion">refund offer</keyword>.</li><li>The company had earlierstarted seizing Indian assets, beginning with 20 of them in France amounting to $23 million.</li><li>The company has said that it will drop litigations to seize diplomatic apartments in Paris and <keyword id="2573" type="General" weightage="20" keywordseo="Air-India" source="Orion">Air India</keyword> airplanes in the US.</li></ul> UK-based <keyword id="262456" type="General" weightage="20" keywordseo="cairn-energy-plc" source="Orion">Cairn Energy PLC</keyword> on Tuesday said it will drop litigations to seize <keyword id="3658" type="General" weightage="20" keywordseo="India" source="Orion">India</keyword>n properties in countries ranging from France to the US, within a couple of days of getting a USD 1 billion refund resulting from the scrapping of a retrospective tax law. The firm, which gave India its biggest onland oil discovery, termed "bold" the legislation passed last month to cancel a 2012 policy that gave the tax department power to go back 50 years and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India. The offer to return money seized to enforce retrospective tax demand in lieu of dropping all litigations against the government "is acceptable to us," Cairn CEO Simon Thomson told PTI in an interview from London. Cairn will drop cases to seize diplomatic apartments in Paris and Air India airplanes in the US in "a matter of a couple of days" after the refund, he said adding Cairn's shareholders are in agreement with accepting the offer and moving on. "Some of our core shareholders likes BlackRock and Franklin Templeton agree (to this). Our view is supported by our core shareholders (that) on balance it is better to accept and move on and be pragmatic. Rather than continue with something negative for all parties which could last for many years," he said. Seeking to repair India's damaged reputation as an investment destination, the government last month enacted new legislation to drop Rs 1.1 lakh crore in outstanding claims against multinationals such as telecoms group Vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev, and Cairn. About Rs 8,100 crore collected from companies under the scrapped tax provision are to be refunded if the firms agreed to drop outstanding litigation, including claims for interest and penalties. Of this, ₹7,900 crore is due only to Cairn. "Once we get to final resolution, part of that resolution is us dropping everything in terms of litigation. We can do that within a very short period of time, just a matter of a couple of days or something," Thomson said. "So we are preparing on the basis of getting this resolution quickly, all these cases being dropped, and putting all this behind." He said all enforcement proceedings brought because of the Government of India's refusal to honour an international arbitration award asking it to return the value of money seized to enforce the retrospective tax demand, will be dropped. "Everything will be dropped. There will be no more litigation, that will be it. It will clear the matter up," he said. Cairn in its half-yearly report on Tuesday said it will return up to USD 700 million out of the ₹7,900 crore (USD 1.06 billion) it is supposed to get from the Indian government, to "shareholders via special dividend and buyback." "Payment of the tax refund would enable a proposed return to shareholders of up to USD 700 million, via a special dividend of USD 500 million and a share buyback programme of up to USD 200 million. The remainder of the proceeds would be allocated to further expansion of the low-cost, sustainable production base," it said. Thomson said Cairn has had a "good, open and transparent line of communications with the Government of India" on finding a resolution to the retro tax issue. "Our aim was to get to a resolution... something which would be acceptable to our shareholders." "We were pleased when the Government of India made what we thought was a pretty bold move, in terms of enactment of the legislation," he said. "The intention of the government, we are obviously aligned with it, is to get this resolved as quickly as possible. Hopefully, that means within the next few weeks. It is good not only for us and our shareholders but also importantly for India." The resolution will bury the ghost of retro tax and help move on. "We are keen to get back to Cairn being talked about in terms of success in Rajasthan. I think moving on from this will allow us to do that," he said referring to the prolific oil discovery the firm made in Barmer. In accepting the terms of the new legislation in India, Cairn would be required to withdraw its international arbitration award claim, interest and costs and to end all legal enforcement actions in order to be eligible for the refund. "It will mean we will forego interest and penalty in terms of the original arbitration award. The important thing for us is it returns the value that was taken from us. From our perspective it is the right thing to do, be pragmatic, put this behind us, move on," he said adding this would help wipe away a factor negatively impacting investment for many years to come. The 2012 legislation was used to levy a cumulative of ₹1.10 lakh crore of tax on 17 entities including UK telecom giant Vodafone but nearly 98 per cent of the ₹8,100 crore recovered in enforcing such a demand was only from Cairn. An international arbitration tribunal in December overturned a levy of Rs 10,247 crore in taxes on a 2006 reorganisation of Cairn's India prior to its listing, and asked the Indian government to return the value of shares seized and sold, dividend confiscated and tax refund withheld. This totalled USD 1.2 billion-plus interest and penalty. The Indian government initially refused to honour the award, forcing Cairn to identify USD 70 billion of Indian assets from the US to Singapore to enforce the ruling, including taking flag carrier Air India Ltd to a US court in May. A French court in July paved the way for Cairn to seize real estate belonging to the Indian government in Paris. All these litigations will be dropped, he added. 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Cairn accepts India's $1 billion refund offer, says will drop all cases against the government

UK's <keyword id="128650" type="COMPANY" weightage="20" keywordseo="Cairn-Energy">Cairn Energy</keyword> has identified USD 70 billion of Indian assets overseas for potential seizure to collect USD 1.72 billion due from the government -- a move if successful will put India in league with Pakistan and Venezuela which faced similar enforcement action over failure to pay arbitration awards. The assets identified range from <keyword id="2573" type="COMPANY" weightage="20" keywordseo="Air-India">Air India</keyword>'s planes to vessels belonging to the Shipping Corporation of India, and properties owned by state-owned banks to oil and gas cargoes of PSUs, three people familiar with the matter said. These assets are across several jurisdictions, they said without giving further details. <keyword id="64469" type="COMPANY" weightage="20" keywordseo="Cairn">Cairn</keyword> plans to move courts in the US to Singapore for seizure of the assets in absence of Indian government's refusal to honour an international arbitration award. "The Indian government naturally will challenge such seizure but to save the assets it may have to pawn money equivalent to the value of assets in some financial security such as bank guarantee. The court will return such a guarantee to India if it does not find merit in Cairn's case. But the surety will be passed on to Cairn if the court finds that India had failed to honour its obligation," a source said. Cairn has got an international arbitration award -- which overturned levy of retrospective taxes and ordered New Delhi to return the value of shares it had sold, dividends seized and tax refunds withheld to recover such taxes -- registered in the US, UK, France, the Netherlands, Singapore, Mauritius, Canada's Quebec province, Japan and UAE. Now it has started moving courts to get a declaration that state-owned entities are alter egos of India and they should be held liable for discharge of the arbitration award in absence of the government making payments. Cairn on May 14 filed a lawsuit in a New York court to get Air India recognised as the alter ego of India and that "it should be held jointly and severally responsible for India's debts, including from any judgment resulting from recognition of the award". Once a court recognises Air India as the alter ego of the Indian government, Cairn can seek attachment or seizure of its assets in the US such as airplanes, immovable assets and bank accounts to recover the amount it was awarded by the arbitration tribunal. The move is similar to a court in the British Virgin Islands ordering in December last year that <keyword id="6368036" type="COMPANY" weightage="20" keywordseo="hotels">hotels</keyword> in New York and Paris owned by Pakistan International Airlines would be used to settle a claim against Pakistan's government by a Canadian-Chilean copper company. Crystallex International Corp had brought a similar lawsuit to attach property of Petroleos de Venezuela, S.A (PDVSA), the state-owned oil company of Venezuela, in Delaware couple of years back after the Latin American country failed to pay the firm USD 1.2 billion that an arbitration tribunal had ordered to pay in lieu of the 2011 seizing gold deposits held and developed by the firm. In 2012, Elliott Management, a buccaneering American hedge fund which held distressed Argentine bonds, seized a handsome tall ship belonging to Argentina's navy. Recently, French courts ruled that a stifled creditor could seize a business jet belonging to the government of Congo-Brazzaville while it was being serviced at a French airport, as well as USD 30 million from a bank account of the country's state oil company. While the finance ministry has so far not commented on the Cairn move, sources said India will take all necessary steps to defend against any such "illegal enforcement action". India, they said, will contest the move on grounds that the government has challenged the arbitration award in the appropriate court in The Hague and it is confident that the award will be set aside. Sources said the government has also engaged a counsel team which is ready to defend against any enforcement action. While they maintained that neither the government nor any PSU has received any such notice, people aware of the Cairn lawsuit said the case has been brought only on Friday and notices in due course will come to the concerned authorities. The sources said as and when any such notice is received, the government/ concerned organisation shall take all necessary steps to defend against "any such illegal enforcement action". "Cairn is taking the necessary legal steps to protect shareholders' interest in the absence of a resolution of the arbitral award," a company spokesperson said commenting on the issue. "Cairn remains open to continuing constructive dialogue with the <keyword id="6377129" type="COMPANY" weightage="20" keywordseo="government-of-india">Government of India</keyword> to arrive at a satisfactory outcome to this long-running issue." The Scottish firm invested in the oil and gas sector in India in 1994 and a decade later it made a huge oil discovery in Rajasthan. In 2006 it listed its Indian assets on the BSE. Five years after that the government passed a retroactive tax law and billed Cairn ₹10,247 crore plus interest and penalty for the reorganisation tied to the flotation. The state then expropriated and liquidated Cairn's remaining shares in the Indian entity, seized dividends and withheld tax refunds to recover a part of the demand. Cairn challenged the move before an arbitration tribunal in The Hague, which in December awarded it USD 1.2 billion (over ₹8,800 crore) plus costs and interest, which totals USD 1.725 million (₹12,600 crore) as of December 2020. The company, which previously said the ruling was binding and enforceable under international treaty law, has been since then courting Indian government officials to get the money paid. But the government has not agreed to pay. Finance Minister Nirmala Sitharaman had last month reiterated that international arbitration ruling on India's sovereign right to taxation sets wrong precedent, but had said that the government is looking at how best it can sort out the issue. The government, which participated in an international arbitration brought by the Scottish firm against being taxed retrospectively, has appealed against The Hague based tribunal's ruling. Sources said the appeal does not inhibit the company from seeking seizure of Indian assets. "It may not go for seizure of assets in the Netherlands during pendency of the appeal, but it can go after assets elsewhere," a source said. 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UK's Cairn Energy identifies $70 billion Indian assets for seizing to recover amount due from government

<keyword id="64469" type="General" weightage="100" keywordseo="cairn" source="Orion">Cairn</keyword> Energy and <keyword id="2573" type="General" weightage="20" keywordseo="Air-India" source="Orion">Air India</keyword> have jointly asked a New York federal court to stay further proceedings in the British firm's <keyword id="174117" type="General" weightage="20" keywordseo="US-lawsuit" source="Orion">US lawsuit</keyword> targeting the airline for enforcement of a USD 1.2-billion arbitral award. The move follows the government enacting a law to scrap retrospective taxation in the country, which in effect will result in withdrawal of the Rs 10,247 crore tax demand on Cairn, according to court documents reviewed by PTI. The British company had won an international arbitration award against levy of such taxes and sought to take over Air <keyword id="3658" type="General" weightage="80" keywordseo="india" source="Orion">India</keyword> assets when the government refused to honour the award and pay it USD 1.2 billion-plus interest and penalty. But, last month, the government enacted the Taxation Laws (Amendment) Act, 2021, that scraps all such retrospective tax demands and has agreed to refund Rs 7,900 crore it had seized from Cairn to enforce such demand. Cairn has indicated that the refund, without interest and penalty, was acceptable to it - opening an avenue to settle the seven-year-old dispute. Cairn and Air India in a joint request to US District Judge Paul Gardephe on September 13 stated that a stay on proceedings would give them "additional time to evaluate the effects and implications" of legislation that repealed the retroactive tax. In return for the Rs 7,900 crore, Cairn would drop lawsuits threatening court-ordered seizures of Indian government property abroad. One of those suits was filed in May against state-owned Air India Ltd, which Cairn has said should be considered alter ego of the Indian government. "The implementing regulations are in the rulemaking process and will take some time," the two said in the petition seeking extension of the October 21 deadline for the presentation of case papers and initial pretrial conference on October 28. They requested the court to "stay any further proceedings in this matter through October 31, 2021, and reschedule the initial pretrial conference and, respectively, the deadline for the parties to submit their Joint Pretrial Letter and Proposed Case Management Plan, for new dates in November 2021." "The Parties have conferred and agreed that the stay will facilitate the efficient resolution of the dispute, conserve the Court's and Parties' resources, and is not intended to obstruct or delay," they added. Cairn had on May 14 brought a lawsuit in the New York district court to hold Air India liable as the alter ego of the Republic of India for the obligations the government owes under a foreign arbitral award. The firm separately filed a petition before the District Court for the District of Columbia to recognise and enforce the arbitration award against India on February 12, 2021. Seeking to repair India's damaged reputation as an investment destination, the government last month enacted new legislation to drop Rs 1.1 lakh crore in outstanding claims against multinationals such as telecom group Vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev, and Cairn. About Rs 8,100 crore collected from companies under the scrapped tax provision are to be refunded if the firms agreed to drop outstanding litigation, including claims for interest and penalties. Of this, Rs 7,900 crore is due only to Cairn. An international arbitration tribunal in December overturned a levy of Rs 10,247 crore in taxes on a 2006 reorganisation of Cairn's India business prior to its listing. It also asked the Indian government to return the value of shares seized and sold, dividend confiscated and tax refund withheld. This totalled USD 1.2 billion-plus interest and penalty. The government initially refused to honour the award, forcing Cairn to identify USD 70 billion of Indian assets from the US to Singapore to enforce the ruling, including taking flag carrier Air India Ltd to a US court in May. A French court in July paved the way for Cairn to seize real estate belonging to the Indian government in Paris. 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Cairn Energy and Air India seek stay on New York court proceedings

<ul class="p-rich_text_list p-rich_text_list__bullet"><li>India has decided to do away with a 2012 law that allowed the government to tax profits from earlier years even though theywere not taxable at the time.</li><li>This brings to end a decade-long tussle with foreign companies that saw the law as a deterrent to investments in India.</li><li>Finance Minister Nirmala Sitharaman introduced 'The Taxation Laws (Amendment) Bill, 2021' which will undo the damage from the 2012 law.</li><li>The bill also proposes to refund the amount paid so far, in these cases, without any interest thereon.</li></ul>In a bid to bury the ghost of retrospective taxation, the government on Thursday brought a bill in the Lok Sabha to withdraw all back tax demands on companies such as Cairn Energy and Vodafone and said it will refund the money collected to enforce such levies. Finance Minister Nirmala Sitharaman introduced 'The Taxation Laws (Amendment) Bill, 2021' in the Lok Sabha that seeks to withdraw tax demands made using a 2012 retrospective legislation to tax the indirect transfer of Indian assets. The bill provides for the withdrawal of tax demand made on "indirect transfer of Indian assets if the transaction was undertaken before May 28, 2012 (i.e. the day the <keyword id="996979" type="PERSON" weightage="20" keywordseo="retrospective-tax">retrospective tax</keyword> legislation came into being)." "It is also proposed to refund the amount paid in these cases without any interest thereon," it said. The bill has a direct bearing on long-running tax disputes with British firms Cairn Energy Plc and Vodafone Group. The Indian government has lost two separate arbitrations brought by the two companies against the levy of retrospective taxes. While the government has virtually no liability in the Vodafone case, it has to refund USD 1.2 billion to Cairn Energy for the shares of the company it had sold, tax refund withheld and dividends confiscated. The bill states that the issue of taxability of gains arising from the transfer of assets located in India through the transfer of shares of a foreign company (indirect transfer of Indian assets) was a subject matter of protracted litigation. The Supreme Court in 2012 had given a verdict that gains arising from indirect transfer of Indian assets are not taxable under the extant provisions of the Act. But to circumvent this, the provisions of the Income Tax Act, 1961 were amended by the Finance Act, 2012 with retrospective effect, to clarify that gains arising from the sale of shares of a foreign company is taxable in India if such shares, directly or indirectly, derive their value substantially from assets located in India. "Pursuant thereto, income-tax demand had been raised in 17 cases. In two cases assessments are pending due to stay granted by High Court," the objects of the Bill said. Out of the 17 cases, arbitration under Bilateral Investment Protection Treaty with the United Kingdom and the Netherlands had been invoked in four cases. "In two cases, the Arbitration Tribunal ruled in favour of the taxpayer and against the Income Tax Department," it said in a reference to arbitration awards won by Cairn and Vodafone. "The said clarificatory amendments made by the Finance Act, 2012 invited criticism from stakeholders mainly with respect to the retrospective effect given to the amendments. It is argued that such retrospective amendments militate against the principle of tax certainty and damage India's reputation as an attractive destination," it said. While the government has in the past few years brought major reforms in the financial and infrastructure sector to create a positive environment for investment in the country, "the retrospective clarificatory amendment and consequent demand created in a few cases continue to be a sore point with potential investors," it said. The country today stands at a juncture when quick recovery of the economy after the COVID-19 pandemic is the need of the hour and foreign investment has an important role to play in promoting faster economic growth and employment. "The Bill proposes to amend the Income-tax Act, 1961 so as to provide that no tax demand shall be raised in future on the basis of the said retrospective amendment for any indirect transfer of Indian assets if the transaction was undertaken before 28th May 2012 (i.e., the date on which the Finance Bill, 2012 received the assent of the President)," it said. It further proposed to provide that the demand raised for indirect transfer of Indian assets made before May 28, 2012 shall be nullified on fulfilment of specified conditions such as withdrawal or furnishing of undertaking for withdrawal of pending litigation and furnishing of an undertaking to the effect that no claim for cost, damages, interest, etc shall be filed. It also proposed to "refund the amount paid in these cases without any interest thereon," it said. The bill proposes to amend the Finance Act, 2012 so as to provide that the validation of demand under section 119 of the Finance Act, 2012 shall cease to apply on fulfilment of specified conditions such as withdrawal of pending litigation and furnishing of an undertaking that no claim for cost, damages, interest, etc shall be filed. 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Indian government brings in a bill to bury the infamous retrospective tax that haunted Cairn and Vodafone for nearly a decade

India is believed to have challenged in a court in The Hague an <keyword id="10983799" type="UNKNOWN" weightage="20" keywordseo="arbitration-tribunal-verdict">arbitration tribunal verdict</keyword> that overturned its demand for ₹10,247 crore in <keyword id="172303" type="PERSON" weightage="20" keywordseo="back-taxes">back taxes</keyword> from <keyword id="128650" type="COMPANY" weightage="20" keywordseo="Cairn-Energy">Cairn Energy</keyword> Plc -- the second time in three months that it has refused to accept an <keyword id="603715" type="COMPANY" weightage="20" keywordseo="international-award">international award</keyword> against retrospective tax. The appeal was filed on Monday, a source with knowledge of the matter said. The <keyword id="47209" type="COMPANY" weightage="20" keywordseo="Finance-Ministry">Finance Ministry</keyword> spokesperson did not immediately respond to an e-mail sent for comments. The appeal against a three-member tribunal at the Permanent Court of Arbitration at The Hague invalidating India's Rs 10,247 crore tax claim on Cairn Energy and ordering the government to return the value of shares it had sold, dividends seized and tax refunds withheld, comes weeks before UK Prime Minister Boris Johnson's visit to India. The British Prime Minister is widely expected to broach India honouring international arbitration awards during his April 26 visit, another source said. In December, the government had challenged in a <keyword id="211440" type="ORGANIZATION" weightage="20" keywordseo="Singapore-court">Singapore court</keyword> an international arbitration tribunal verdict that overturned its demand for ₹22,100 crore in back taxes from Vodafone Group Plc. Since the seat of Vodafone arbitration was Singapore, an appeal was filed in a court in that country. In the case of Cairn, the seat was The Hague and so an appeal has been filed in a court in the Netherlands, the first source said. The appeal was filed on a day when Minister of State for Finance Anurag Singh Thakur had told the Lok Sabha in a written reply that "any such decision on filing of appeal or otherwise is taken only after careful consideration of all aspects of the matter." The tribunal's 582-page detailed verdict that asked India to return USD 1.2 billion-plus interest and cost to Cairn was registered in the Netherlands on January 8 and New Delhi acknowledged it on January 19, the source said. Finance Minister Nirmala Sitharaman had earlier this month indicated the government's intent of appealing against the award on grounds of it questioning the sovereign powers of India to levy taxes. Her ministry feels taxation is not a subject of bilateral investment treaties, like the UK-India Bilateral Investment Treaty under which Cairn had sought rescinding of the tax demand raised, and so the award should be appealed. It is of the opinion that Cairn set up a tax abusive structure in 2006 when it reorganised its India business to list the local unit, and did not pay taxes anywhere in the world on the gains that it made in India, they said, adding India had made an unsuccessful case of tax not being part of the treaty before the arbitration panel as well. However, the arbitration award specifically made it clear the base of the judgment was not a challenge to the 2012 law or India's sovereign right to tax. "The issue at stake is thus not a matter of domestic tax law, it is rather whether the fiscal measures taken by the state, valid or not under its own tax laws, violate international law," the tribunal had said in a unanimous verdict. The Hague panel found that a 2012 law passed by the Indian Parliament was a new tax, not a clarification of prior law that could be applied to earlier years. Cairn has moved courts in nine countries to enforce the award against India. The award has already been recognised by courts in the US, the UK, Netherlands, Canada and France and the same is in the process in Singapore, Japan, the United Arab Emirates and the Cayman Islands. The registration of the award is the first step towards its enforcement in the event of the government not paying the firm. Once the court recognises an arbitration award, the company can then petition it for seizing any Indian government assets such as bank accounts, payments to state-owned entities, airplanes and ships in those jurisdictions, to recover the monies due to it, sources said. Sources said the government believes that taxation is not covered under investment protection treaties with various countries and the law on taxation is a sovereign right of the country. While the treaties are primarily aimed at the protection of investments, the tax is levied on 'returns' earned by entities. But the Hague tribunal had gone into this claim and rejected it. Vodafone had challenged before the arbitration tribunal the demand for ₹7,990 crore in capital gains taxes (₹22,100 crore after including interest and penalty) under the Netherlands-India Bilateral Investment Treaty (BIT). The demand pertained to Vodafone's USD 11-billion acquisition of 67 per cent stake in the mobile phone business owned by Hutchison Whampoa in 2007. 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Indian government appeals against tribunal ruling of $1.4 billion Cairn arbitration award

New Delhi, Mar 10 () British oil explorer Cairn Energy Plc expects an international arbitral tribunal to give a decree by the summer of 2020 on its challenge to the Indian government seeking Rs 10,247 crore in retrospective taxes. The three-member tribunal, which had in December 2018 completed main court hearings in the British company's challenge to the Indian government using a retrospective legislation to seek Rs 10,247 crore in taxes, was supposed to give an award by February 2019, but in March 2019, it delayed it to 2019-end and then to the summer of 2020. "All formal hearings and submissions have now been made and the tribunal is in the process of drafting its award. The tribunal has indicated that it expects to be in a position to issue the award in the summer of 2020," Cairn said in its half-yearly earnings announcement on Tuesday. No reason was given by the tribunal for the delay in the award. Cairn said it is seeking full restitution for losses totalling more than USD 1.4 billion resulting from government expropriation of its investments in India in 2014. The company, which gave the country its biggest oil discovery, received a notice from the income tax department in January 2014, requesting information related to the group reorganisation done in 2006. Alongside, the department attached the company's near 10 per cent shareholding in its erstwhile subsidiary, Cairn India. In March 2015, the tax department sought Rs 10,247 crore in taxes on alleged capital gains made by the company in the internal reorganisation. Cairn Energy had in 2010-11 sold Cairn India to Vedanta. Following the merger of Cairn India and Vedanta in April 2017, the UK firm's shareholding in Cairn India was replaced by a shareholding of about 5 per cent in Vedanta issued together with preference shares. In addition to attaching its shares in Vedanta, the tax department seized dividends totalling Rs 1,140 crore due to it from those shareholdings, and set off a Rs 1,590-crore tax refund against the demand. Cairn Energy in 2015 initiated an international arbitration to challenge retrospective taxation. Pending final award, the tax department sold Cairn Energy's shares in Vedanta to recover part of the tax demand. "The Indian income tax department holds Cairn UK Holdings Ltd (a direct subsidiary of Cairn Energy) as an assessee in default in respect of tax demanded on the 2006 transactions, and as such has pursued enforcement against CUHL's assets in India. "To date, these enforcement actions have included attachment of CUHL's shareholding in Vedanta Ltd and sale of 181,764,297 shares and seizure of the proceeds, seizure of the proceeds from the redemption of the preference shares, seizure of the USD 159.8 million dividends due to CUHL, and offset of a USD 222.8 million tax refund due to CUHL in respect of another matter," the statement said. To date, 99 per cent of Cairn UK Holdings Ltd's (CUHL) shareholding has been liquidated by the tax department, it said. The assessment by the tax department of principal tax due on the 2006 transactions is Rs 10,267 crore, plus applicable interest and penalties. "Interest is currently being charged on the principal at a rate of 12 per cent per annum from February 2017, although this is potentially subject to the tax department's Indian court appeal that interest should be back-dated to 2007," it said. "Penalties are currently assessed as 100 per cent of the principal tax due, although this is subject to appeal by CUHL that penalties should not be charged given the retrospective nature of the tax levied." Cairn said it has got legal advice confirming that the maximum amount that could ultimately be recovered from the company by the tax department, in excess of the assets already seized, is limited to the value of CUHL's assets, principally the remaining ordinary shares in Vedanta Ltd. "In March 2015, Cairn filed a Notice of Dispute under the UK-India Bilateral Investment Treaty in order to protect its legal position and seek restitution of the value effectively seized by the Indian income tax department (IITD) in and since January 2014. "Cairn's principal claims are that the assurance of fair and equitable treatment and protection against expropriation afforded by the treaty have been breached by the actions of the IITD, which is seeking to apply retrospective taxes to historical transactions already closely scrutinised and approved by the Government of India. The IITD has attached and seized assets to try to enforce such taxation," it said. Cairn is pleading that the effects of the tax assessment should be nullified and that the company should receive recompense from the government for the loss of value resulting from the 2014 attachment of CUHL's shares in Cairn India Ltd and the withholding of the tax refund, which together total about USD 1.4 billion, according to the statement. "The treaty proceedings formally commenced in January 2016 following an agreement between Cairn and the Republic of India on the appointment of a panel of three international arbitrators under the terms of the treaty. Cairn's statement of claim was submitted to the arbitral tribunal in June 2016 and the Republic of India submitted its statement of defence in February 2017. "Further submissions and document production took place in 2017 and 2018. The main evidentiary hearing of Cairn's claim under the Treaty took place in August 2018 in The Hague with a final hearing in December 2018. All formal hearings and submissions have now been made and the tribunal is in the process of drafting its award. The tribunal has indicated that it expects to be in a position to issue the award in the summer of 2020," it said. Based on detailed legal advice, Cairn said it remains confident that it will be successful in this arbitration and, accordingly, no provision has been made for any of the tax or penalties assessed by the IITD. It had previously stated that the arbitration panel is expected to issue a binding and internationally-enforceable award. ANZ HRS

Cairn expects arbitration award in retro tax case by this summer

<ul><li>The Centre on Thursday introduced the <keyword id="406098" type="PERSON" weightage="20" keywordseo="Taxation-Laws">Taxation Laws</keyword> (Amendment) Bill to bring closure to the retrospective income tax law which was introduced in 2012.</li><li>The UPA government in 2012 imposed capital gains tax retrospectively on some companies like <keyword id="11799509" type="UNKNOWN" weightage="20" keywordseo="cairn-and-vodafone">Cairn and Vodafone</keyword>.</li><li>British oil and gas company Cairn Energy is seeking to recover 1.2$ billion from India.</li></ul>The retrospective amendments attracted a lot of attention, both when they were first introduced in 2012 as well as over the years. In the recent past, two arbitral awards were issued under India’s Bilateral Investment treaties, which reignited the debate. In a welcome step, though delayed, in trying to put an end to this long-standing controversy, the Taxation Laws (Amendment) Bill, <keyword id="3718131" type="PERSON" weightage="20" keywordseo="2021">2021</keyword> (‘the Bill’) has now been passed by the Lok Sabha to withdraw the retrospective effect of these amendments. The proposal in the Bill addresses two distinct situations. The first is forward looking and provides that no order will be passed or demand raised going forward in respect of indirect transfer transactions that took place before 28 May 2012 (i.e. the date of enactment of the Finance Act, 2012). The second part relates to cases where orders of assessment, re-assessment, rectification or in withholding proceedings have already been passed in respect of pre-28 May 2012 transactions. In such cases, the orders are sought to be nullified. In such cases, the taxpayer is also entitled to a refund of taxes already paid in respect of such transactions, but without any interest being paid thereon by the Government. However, such nullification and grant of refund is not unconditional. The Bill requires the taxpayer to fulfil certain conditions, some of which are set out in the Bill and some which will be prescribed later. The conditions set out in the Bill include withdrawal by the taxpayer of all proceedings initiated by it as well as furnishing an undertaking waiving its right to claim costs, interest, damages or other relief from the Government. This is where the Bill will have maximum impact. The Statement of Objects and Reasons mentions that demands under these retrospective provisions have been raised in 17 cases, out of which arbitration proceedings under investment treaties had been initiated in 4 cases. In such cases, the order can be nullified and taxes paid (if any) can be refunded subject to the above conditions being fulfilled. Taxpayers in such situations will effectively have a choice to make. To some extent, this choice will also depend on what further conditions get prescribed in this regard. I only hope that this move settles the disputes and debate on this topic. <keyword id="11729733" type="UNKNOWN" weightage="20" keywordseo="see-also">SEE ALSO</keyword> <a href="https://www.businessinsider.in/business/news/byjus-last-two-acquisitions-and-a-deal-with-disney-reveal-its-american-dream/articleshow/84783749.cms">Byju's last two acquisitions and a deal with Disney reveal its American dream ⁠— one that is anchored in India</a> <a href="https://www.businessinsider.in/personal-finance/news/six-red-flags-for-investors-to-avoid-becoming-a-victim-of-misselling-by-agents-or-financial-advisors/slidelist/84782913.cms">Six red flags for investors to avoid becoming a victim of misselling by agents or financial advisors</a>

OPINION: Retrospective tax — Putting an end to a long-standing controversy

The government today said that it is open to out-of-court settlement with <keyword id="15492" type="CITY" weightage="80" keywordseo="Vodafone">Vodafone</keyword> and Cairn on tax cases, where the arbitration process has been initiated. 
 "As far as out of court settlement for Vodafone is concerned we have always said that we are prepared to discuss with friends and colleagues in Vodafone in good faith as to whether it might be possible to get to negotiated settlement we are always open to those discussions," Minister of State for Finance <keyword id="6357677" type="PERSON" weightage="80" keywordseo="Jayant-Sinha">Jayant Sinha</keyword> said. 
 
Foreign investors like Vodafone have dragged government to arbitration over a Rs 20,000 crore tax dispute arising out of retrospective applicability of the tax law. 
 British oil explorer <keyword id="128650" type="COMPANY" weightage="80" keywordseo="Cairn-Energy">Cairn Energy</keyword> plc has also initiated a similar move over Rs 10,247 crore tax liability due to the same reason. 
 
The basic tax demand for Vodafone was Rs 7,990 crore but the total outstanding, including interest and penalty, is estimated to have risen to Rs 20,000 crore. 
 
While both the central government and Vodafone have named their arbitrators, they have not yet been able to agree on a third arbitrator to preside over the proceedings. 
 
The case relates to the retrospective amendment of the I-T laws carried out by the UPA government in 2012 to overturn the Supreme Court verdict, which had favoured Vodafone. 
 
Cairn had in April named former Bulgarian minister and lawyer Stanimir A Alexandrov as its arbitrator in the matter. India on its part has said it would soon appoint an arbitrator in the tax dispute. 
 Asked if the government is considering out-of-court settlement for Vodafone, CBDT Chairperson <keyword id="2573203" type="PERSON" weightage="80" keywordseo="Anita-Kapur">Anita Kapur</keyword> told PTI, the government is always in the favour of reducing litigation. 
 
"We will have to wait for some developments. The government is always open to reduce litigation dispute by whatever ways it is possible." 
Sinha also said that the most comprehensive efforts to reduce litigation is by elimination of exemptions and reducing corporate tax rates. 
 
"The other thing that we have underway is simplification of the tax code...so whether it is through cleaning up or streamlining exemptions, whether it is simplifying the tax code, we are absolutely trying to reduce the amount of litigation that is in the system right now," he said. 
 
"Our goal is to ensure that our tax system is fair, it's simple, it's predictable... Our endeavor with respect to all these specific cases is that we always we will attempt in all good faith to try and settle them. That remains our consistent principle for these specific cases," he added. 
 
Image credit: Indiatimes

Government open to out-of-court settlement with Vodafone and Cairn on tax cases

Tax demand against Vodafone and <keyword id="128650" type="COMPANY" weightage="100" keywordseo="Cairn-Energy">Cairn Energy</keyword> can’t be disputed, said CBDT. CBDT today said they should promptly avail the one-time dispute resolution scheme announced in the Budget to close the issue by paying the principal tax and getting waiver on interest and penalty. 

	CBDT Chairman Atulesh Jindal told PTI "as long as" the retrospective amendment of the IT Act passed by Parliament remains valid, the "demand (of tax against them) remains valid."
 Jindal, in an interview to PTI, said apart from UK's Vodafone Group plc and Cairn Energy plc, there are about a dozen more such companies which are facing similar demands due to the retrospective amendment of the <keyword id="6354751" type="COMPANY" weightage="100" keywordseo="Income-Tax">Income Tax</keyword> Act. 

	"They (companies) are basically challenging the retrospective amendment. Retrospective amendments have been passed by Parliament. They have not gone against passing of retrospective amendment before any court...so, as long as the retrospective amendment is valid, the demand (of the IT department) remains valid.
 Finance Minister <keyword id="42575" type="PERSON" weightage="100" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>, in his <keyword id="117156" type="UNKNOWN" weightage="100" keywordseo="Budget-speech">Budget speech</keyword> yesterday, announced a new dispute resolution mechanism for such companies who are in confrontation with the taxman's action. 

	"In order to give an opportunity to the past cases which are ongoing under the retrospective amendment, I propose a one-time scheme of Dispute Resolution for them," Jaitley had said while presenting the Budget for 2016-17 in Parliament. 

	The scheme entails paying up of the principal tax by the company that has been served with a tax notice and at the same time getting a waiver on interest and penalty.
 

	The CBDT boss said government has always made it clear that tax disputes "are not" covered under the Bilateral Investment Promotion and Protection Agreement (BIPA).
 

	"It is a different matter that they (companies) have gone under BIPA and our stand is that tax disputes are not covered under BIPA. That's the situation. Hence, a sort of opportunity has been given to settle these disputes (in the Budget)," the Central Board of Direct Taxes (CBDT) Chairman said.
 

	He said the department cannot go back on the tax demand raised against these firms as assessment orders were "already passed" and "demands raised" before the IT Act was amended with a retrospective effect.
 

	When told that the companies involved have not shown much initial enthusiasm to the proposal, Jindal said he is hopeful and thinks "they (companies) should come forward."
 

	Commenting on the Budget proposal, Cairn spokesperson had said that "while international arbitration proceedings have commenced to seek resolution of the tax dispute, Cairn notes the efforts of the Government of India to resolve the retrospective tax issue and will study the text of the Budget speech."
 

	A Vodafone spokesperson had said: "We will of course study the details of what the Finance Minister has proposed today, while continuing to seek resolution of this matter through international arbitration.
 "Vodafone has always maintained that there was no tax to pay at the time it completed its acquisition of Hutchison business in 2007... Vodafone was the acquirer in this transaction. The company made no capital gains whatsoever." While Cairn Energy is facing a tax demand of Rs 10,247 crore on a 2006 business re-organisation it carried out in its India unit before getting it listed, Vodafone is facing tax liability over its USD 11 billion acquisition of a 67 per cent stake in the mobile-phone business owned by <keyword id="127031" type="COMPANY" weightage="100" keywordseo="Hutchison-Whampoa">Hutchison Whampoa</keyword> in 2007. 

	Jindal said a few of the other such cases of indirect transfer of assets coming under the ambit of the retrospective amendment where IT demands have not been raised proceedings are pending due to reasons like 're-opening' of the case or some other procedure, will have to go through the "approvals" and "clearances" of a Budget announced committee which will be headed by the Revenue Secretary and have the CBDT Chairman as a Member.
 

	When the Finance Minister was yesterday asked if government hopes to arrive at the desired settlement, when the involved companies are disputing the principal liability in first place, he had said: "They have two options- either to litigate or settle."

	 
	 
	(Image credits: indiatimes)

Tax demand against Vodafone and Cairn Energy remains valid

Millions of investors of the five energy companies, which have been dragged into the corporate espionage scandal, are unlikely to be impacted by it. 
	 Last week, the Delhi Police arrested five officials of energy companies that include <keyword id="6484187" type="CITY" weightage="20" keywordseo="RIL">RIL</keyword>, Reliance <keyword id="3821" type="CITY" weightage="20" keywordseo="ADAG">ADAG</keyword>, <keyword id="6368035" type="CITY" weightage="20" keywordseo="essar">Essar</keyword>, <keyword id="59287" type="COMPANY" weightage="20" keywordseo="Cairn-India">Cairn India</keyword> and <keyword id="2743320" type="UNKNOWN" weightage="20" keywordseo="Jubliant-Energy">Jubliant Energy</keyword> for theft of confidential documents related to both Coal and Oil Ministries. 
	 
	While these companies have not been named in the First Information Report (FIR) filed by the Delhi Police, if investigated, could have serious repercussions on both the company as well as the Board. 
	 
	“For the authorities to investigate the companies, they have to first establish that the officials involved were acting on behalf of the Board and not for personal benefits,” said corporate lawyer Sameer Chaudhary, partner, Sastra Legal. 
	However, he pointed out that it would be difficult for the agencies to prove any collusion between the officials and the companies as concrete evidence would be required. 
	 
	“The companies could be booked under the Official Secrets Act (OSA), if it is proven. Nevertheless, I am sure that the angle of investigation would be to check, who is the beneficiary and that's how the needle of suspicion would point towards the board as well,” added another corporate lawyer, Ajay Brahme, founder of Ajay Brahme &amp; Co. 
	 
	Apart from these sections, the Corporate Affairs Ministry too could begin a suo-moto probe by invoking Section 210 under the Companies Act, 2013, “However, it is very distant right now. We have to remember that the investigating agencies will have to first prove that the information leaked was benefitting the companies,” noted Chaudhary. 
	 
	While Chaudhary noted that the companies can be barred by market watchdog SEBI if the investigation becomes more conclusive, market analysts believe that the firms cannot be barred from trading in the capital market. 
	 
	“SEBI can take any action, like it did with realty giant DLF, only if there are violations of the securities law. However, I do not believe that in a case such as this, the regulator can do much,” stated P Phani Sekhar, senior fund manager of Karvy Stock Broking. 
	 
	Interestingly, the entire controversy has not impacted the performance of these companies in the market. “We do not see any particular trend in the market as far as these firms are concerned. The companies are performing in line with the expectations,” added Sekhar. 
	 
	While it may be speculative at the moment, what remains to be seen is whether the NaMo government, which is considered to be close to India Inc, intends to take it forward seriously.

You Searched For "Cairn Energy case" and got 10 results

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