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Cairn expects arbitration award soon
British oil explorer has challenged Indian government order seeking `10,247 cr in retrospective taxes
New Delhi: 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 $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.
