Government may challenge international tribunal’s Cairn tax order

2021-02-18 01:10:37

NEW DELHI: The government is in no mood to relent in its fight to recover $1.2 billion in tax claims from Cairn and is looking to appeal against the international tribunal’s verdict or get the British company to seek a settlement under ‘Vivad Se Vishwas’ scheme.
The tough posture comes despite Cairn approaching a US district court to press for the arbitration award, which sources dismissed as posturing given that the government has time until the third week of March to appeal against the order. By all accounts, the government is set to follow the Vodafone example, where its case has been admitted in the Singapore high court.
Although the government is still “studying the order”, its stance is clear and officials, who are due to meet a team led by Cairn CEO Simon Thomson, are expected to articulate the position.
Sources said that the stance was not just the finance ministry’s alone but even the ministry of external affairs has been engaged in the deliberations given that British authorities have taken up the case on behalf of Cairn with their Indian counterparts, including PM Narendra Modi and the late Arun Jaitley, when he was finance minister.
There have been suggestions that Cairn, and even Vodafone, could opt for a settlement of the long-pending dispute by opting for ‘Vivad Se Vishwas’ scheme, where the entire disputed amount has to be paid by March 31.
In case of appeals related to disputed penalty, interest or fee, 25% of such disputed amount is payable, if payment made before March 31. After this, 30% of the disputed amount becomes payable.
Ahead of Thomson’s India visit the British firm, which struck oil in Rajasthan and exited India after selling its interest, had sought to put pressure on the government by filing a case in the US district court to enforce the arbitration award. Thomson had recently said that the Cairn wanted the Indian government to honour the award quickly.
The tribunal had ruled that India had violated provisions of the bilateral investment treaty by retrospectively amending the law to levy tax on transactions with underlying assets in India.

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