Updated Dec 24, 2020 | 15:53 IST
Similar to the Vodafone dispute that was decided only months ago, the one between the Indian government and Cairn involves retrospective taxation. Representational image. | Photo Credit: iStock Images
Key Highlights
India s Income Tax department had claimed that Cairn UK had accrued capital gains in excess of Rs 24,500 crore
India s retrospective tax was introduced in 2012 and made any capital gains resulting from the transfer of shares from a foreign entity whose assets were located in India taxable from 1962
The case represents the second successive one that India has lost in the last three months relating to retrospective taxation
An international arbitration tribunal has directed the Indian government to pay $1.2 billion in damages to UK’s Cairn Energy the second such embarrassing loss for the Modi government following the one to Vodafone in another arbitration matter just three months back. Both the cases were against a controversial 2012 retrospective tax legislation that gave the Indian government the power to go after M&A deals all the way back to 1962 if the underlying asset was in India.
The international arbitration tribunal ruled unanimously that India had breached its obligations to Cairn under the UK-India Bilateral Investment Treaty and awarded Cairn damages of $1.2 billion plus interest and costs, Cairn Energy said in its statement.
Retro tax arbitration: India to pay $1 4 bn to Cairn Energy orissapost.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from orissapost.com Daily Mail and Mail on Sunday newspapers.
New Delhi, December 23
India has been ordered to return up to USD 1.4 billion to Cairn Energy plc of the UK after the government lost an international arbitration over the retrospective levy of taxes.
The three-member tribunal, which also comprised a nominee of the Indian government, unanimously ruled that India s claim of Rs 10,247 crore in past taxes over a 2006-07 internal reorganisation of Cairn s India business was not a valid demand.
India, it said, failed to accord the claimants (Cairn Energy s) investments fair and equitable treatment under the bilateral investment protection pact the nation had with the UK, it said in a 582-page order.
Retro Tax Arbitration: India asked to pay up to $1.4 billion to Cairn Energy
India
Published: Wednesday, December 23, 2020, 16:58 [IST]
New Delhi, Dec 23: India has been ordered to return up to USD 1.4 billion to Cairn Energy plc of the UK after the government lost an international arbitration over the retrospective levy of taxes.
Representational Image
The three-member tribunal, which also comprised a nominee of the Indian government, unanimously ruled that India s claim of Rs 10,247 crore in past taxes over a 2006-07 internal reorganisation of Cairn s India business was not a valid demand.
India, it said, failed to accord the Claimants (Cairn Energy s) investments fair and equitable treatment under the bilateral investment protection pact the nation had with the UK, it said in a 582-page order.