Friday, 28 January, 2022
HomeIndiaIndia asked to return $1.2 billion to Cairn after Modi govt loses...

India asked to return $1.2 billion to Cairn after Modi govt loses tax dispute arbitration

International arbitration tribunal rules tax claim was not valid demand & asks Modi govt to repay funds withheld along with interest to Cairn.

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New Delhi: India has been ordered to return $1.2 billion to Cairn Energy Plc after Prime Minister Narendra Modi’s administration lost arbitration proceedings in a tax dispute.

An international arbitration tribunal ruled that the tax claim was not a valid demand and asked the government to repay the funds withheld along with interest to Cairn, people with knowledge of the matter said, asking not to be identified citing rules on speaking to the media. India had seized dividend, tax refund and sale of shares due to the Scottish oil explorer to partly recover the dues. India can appeal.

A spokeswoman for the tax department did not answer a call made to mobile phone during business hours.

Cairn Energy’s victory will be a second loss for India in an international arbitration after Vodafone Group Plc won a years-long tax dispute with the Indian government in September over a controversial $3 billion tax demand. Unlike in the Vodafone case, the government will have to repay Cairn. India in 2012 retrospectively amended the tax code, giving itself the power to go after M&A deals all the way back to 1962 if the underlying asset were in India.

The restitution of Cairn’s claim compares with its market capitalization of $1.3 billion, and “if successful and enforced, could produce windfall-enabling M&A or a special dividend,” Bloomberg Intelligence analyst Will Hares wrote last year.

According to the verdict, the retrospective tax demand was unfair treatment under the bilateral investment protection pact between the South Asian nation and the U.K., the people said.

The U.K. oil explorer received the tax claim from Indian authorities in March 2015 over a restructuring carried out in 2006 while preparing for an initial public offering of Cairn India. The Indian tax authorities had seized 10% of Cairn India Ltd.’s shares, then valued at about $1 billion, according to information on Cairn Energy’s website.

In 2011, Cairn Energy sold most of its holding in the Indian unit to billionaire Anil Agarwal’s Vedanta Resources Plc for $8.7 billion. Cairn Energy had transferred ownership of its Rajasthan oil field, the country’s biggest onshore discovery in two decades, to Cairn India.

The Edinburgh-based company filed a dispute under the U.K.-India Investment Treaty and sought international arbitration that started later in 2015 for the losses over expropriation of its investments in India from the minority holding.- Bloomberg


Also read: Tata vs Mistry, Ambani vs Bezos among biggest trials in the world coming to courts in 2021


 

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20 COMMENTS

  1. U R truly prejudice…. It’s Govt of India and always any negative thing happens to the country U jump naming the personal Govt, as if it’s proprietary concern. Instead U should find out inputs to provide to the agencies to protect our interest. I was a regular follower of your news, but, of late, U R clearly biased and clear cut anti Govt. Your team is capable of twisting the presentations.

  2. This is the first place where I find Modi govt is being held responsible for everything bad that is happening to this country..😂😂😂😂
    Maybe next time the editor gets a divorce he will blame Modi .. Idiots

  3. “Modi” govt loses tax dispute arbitration and “India” asked to pay – By this logic of using Modi interchangeably with political convenience for headline management headline could also be like – Indian govt lost arbitration and Modi asked to Pay

  4. This is a fabrication of an old news. Your journalism.is good for exactly what the news is worth..toi*let paper.! And I don’t want to pay my good money for toi*let paper..we Indians wash!!

  5. Again BS headline – No mention that it was CHOR Rajas in UPA who passed retrospective taxation legislation or that Pranab Mukherjee defended this nonsense or that even after SC sided with Vodafone , the GoI still pursued the litigation!

    • Mr Raj: Then why didn’t the Modi government repeal it ? After all, retroactive application of the law is a big no-no in almost all civilised countries. It is sort of like saying that the speed limit today has been lowered to 30 km/hour. But since you drove at 50km/hour last year, you will be punished for something that wasn’t a crime when it was carried out !

      Bot the UPA and the Modi government have been utterly unprofessional about this and have sullied India’s reputation in the eyes of foreign investors. How the hell does the government expect to woo investors when investors know that they will face an unpredictable legal environment, corruption and spools of red tape in India?

  6. The print.. Everyone knows for who u working for.. whatever u trying to tarnish modi’s image.. it wont impact anything.. better luck next time

  7. The tax department in India has shown over and over again that it does not know tax law or treaties! Now pay a billion dollars!

  8. Why do you write such stuff based on your malifide agenda against Modi govt every time
    The tax law introduced was in 2012 and due that now the case has been lost.
    So why do you blame the Modi Govt
    Can’t you write govt of India
    Or mention your owner’s name Congress govt in the title which caused this

  9. This is case related to 2007 tax dispute & case filed during UPA government & order to pay tax passed in 2014 so headline should be changed accordingly as this seems to be deliberately done

  10. Ha ha. Everyone in India know about our legal system and judges. International courts are the only solution if anyone want justice here. Hire Salve and you win here. Ha ha

  11. The Print is up to its usual tricks – India bashing.
    Nobody cares about this silly inconsequential news; but The Print turns it into a headline.

  12. What is meaning of Modi Government? Can’t you use proper terms as Government Of India.
    Don’t you know it was way before 2014?
    Writer with Leftist agenda.

  13. Modi govt loses tax dispute arbitration – what is this? This is an order against the attachment by IT Department, made in January, 2014.

    • Ha ha… True. Also to be noted is that there is no oitgo from govt exchequer but only release of hitherto held up amount.
      Since Modi does not seem to be losing much (in terms of elections etc.)… But ThePrint wants to show that Modi govt has lost something….

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