new Delhi. The Government of India has given Rs 7,900 crore to Cairn Energy of Britain. This amount has been given for the settlement of a case of retrospective taxes ie retrospective taxation. Cairn Energy said in a statement that it has received back $1.06 billion from the Indian government. Of this amount, about 70 per cent will be returned to the shareholders.
This case dates back to 2012, when the Government of India, using retrospective tax, demanded Rs 10,247 crore from Cairn. With this law, the tax department had got the right to open the 50-year-old case.
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The stake was sold to Vedanta
Cairn restructured its Indian business in 2006-07 before listing on the Indian stock exchange. This included the Rajasthan oil field. The company sold its majority stake in the Indian unit to Vedanta in 2011. On this, the company was given a notice of tax demand in 2014 regarding the alleged capital gain from the restructuring.
Cairn had raised objection
UK-headquartered Cairn had objected to this and said that all the taxes related to the restructuring have been paid and it has also got the approval of all the relevant authorities. However, in 2014, the tax department forfeited and sold the remaining shares in the Indian unit of Cairn to settle the tax demand. Also withheld the tax return and forfeited the dividend. The total amount was Rs 7,900 crore.
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Appealed to International Orbitation
In this case, Cairn had filed an appeal in the International Arbitration against the levy of tax duty and coercive action. The arbitration ruled in favor of the company on 22 December 2020 and asked the Government of India to refund the tax collected along with interest.
India had to return the amount
The government initially refused to comply with the order, but later came out with a law in August 2021 to quash all retrospective tax demands and refund the amount collected without interest or penalty. Simon, CEO of Capricorn Energy Thomson said, “India has a special place in the history of our company and we are very happy that this issue has now come to an end.”
Tags: business news, Indian Government, Tax
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