- Singapore’s arbitration court has ruled retrospective tax wrong
- Government decides to appeal against arbitration court’s decision
Cairn India said on Sunday that it has discussed all possible proposals with the Government of India regarding the arbitration order. Cairn says that it is ready to settle the matter with mutual consent in the interests of the company’s shareholders. According to the company, we have had constructive discussions with Finance Ministry officials in Delhi in the last few days and hope to find a amicable solution to the matter.
Cairn won the case in December
In December 2020, Cairn Energy won the Singapore Orbitration Court against the government in a retrospective tax case. Retrospective refers to the old tax case. In this case of tax dispute, the Court of Arbitration (Arbitration Court) ordered the Government of India to pay interest and penalty in addition to $ 1.2 billion. This amounted to more than $ 1.4 billion. The Government of India has not paid this amount to Cairn Energy. India has to challenge in such cases within 3 months. Cairn’s decision has come in December and the last date to challenge it is March 21.
Cairn’s successful history of operating in India
The company said in a statement that Cairn has a successful history of operating in India. We have invested billions of dollars here. This has brought employment and benefited the local communities. Our business in India has generated more than $ 20 billion in revenue. The freezing of our property due to the retrospective tax in 2014 has negatively affected all parties. We are eager to leave the matter behind and move forward in a positive manner.
Cairn filed a case against the Indian government
Cairn Energy has filed a case against the Government of India in a US district court for the recovery of $ 1.2 billion in retrospective tax and its interest. This case has been filed for tax of $ 1.2 billion (about 9 thousand crore rupees). Cairn filed the case on 12 February. In this, he has demanded interest and others since 2014.
Government will appeal against arbitration order
Meanwhile, the central government has decided to appeal against the arbitration order in favor of Cairn India. The government will speak of its right to levy tax in the appeal against the order of the arbitration court. Sources said that the government will also challenge the claims made in several international courts on behalf of Cairn Energy.
Trade agreement violation
According to the arbitration order, India has violated the trade agreement with Britain. The court said that Cairn’s Indian tax claim of Rs 10,247 crore on internal reorganisation of business in India in 2006-07 is not correct. The tribunal had ordered a government-held tax refund to refund the money it had sold, forfeiting the dividend and recovering tax demand.
Intention to pressure payment
Cairn Energy has filed a lawsuit in the US with the intention of forcing the Indian government to pay. The company wrote a letter to the government last month saying that if its money is not received soon, it will be forced to seize the assets of the Indian government abroad. Cairn Energy has also started assessing which assets it can seize. The company plans to seize Air India’s plane and ship.
Assessing Indian assets
There are reports that Cairn is also evaluating some Indian properties in Canada. However, its CEO says that he still wants to work fast with the Indian government. Let me tell you that the Government of India had to face defeat in a similar case of Vodafone for $ 2 billion. However, recently the government has challenged against this decision. In this case, the government can also take steps in the case of Cairn Energy.