Government to appeal against Cairn Energy’s 1.2 billion dollars award | Government will appeal the order in favor of Cairn Energy, will talk about its right to tax


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Cairn Energy CEO Simon Thomson

  • The government will also challenge the claims made in several international courts on behalf of Cairn Energy
  • The company has filed an application in an American court to enforce the arbitration court order.

The ongoing dispute between Cairn Energy and the government over the retrospective tax has not stopped even after the arbitration court order. The government has decided to appeal against the order of the arbitration court given in favor of the British company in this case.

Will talk about the right to tax

In December, the Orbitration Court asked the Indian government to pay $ 1.2 billion to the company. 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.

Cairn Energy meets Finance Secretary CEO

On Thursday, the company’s CEO Simon Thomson met Finance Secretary Ajay Bhushan Pandey and other officials to resolve the matter amicably. The company’s top management is scheduled to meet officials of the finance ministry on Friday as well.

Government welcomed Cairn’s initiative

The government has welcomed the move by Cairn Energy to resolve the matter. Sources say that the company will have to get the dispute resolved under the trust scheme. In this, the interest and penalty of the arrears of tax on it will be waived. Along with the company, the government also wants an amicable solution to the matter.


Identification of government assets

Cairn Energy filed an order in a US district court this week to get $ 1.2 billion from the Government of India on the order of the Arbitration Court. According to media reports, Cairn Energy is trying to identify Air India’s aircraft, government bank accounts, ships and other assets. The company is doing all this so that it cannot seize them if they are not paid by the government.

The arbitration court said, Retrospective tax wrong

In December last year, the Permanent Arbitration Court of The Hague ruled that the government had incorrectly imposed a retrospective tax on Cairn Energy. For this (retrospective) tax imposed in the past, it had asked the government to return the company $ 1.2 billion.

The government had asked for a tax of 24,500 crore

The case dates back to 2006-07, when Cairn UK handed over shares of Cairn India Holding to Cairn India in an internal transaction. The tax department claimed the company to be capital gains from the transaction that took place before Cairn India’s PIO and demanded a tax of Rs 24,500 crore.

The company’s share in Cairn India was sold

In 2011, Cairn Energy sold majority stake in Cairn India to Anil Agarwal’s company Vedanta and held a 9.8% minority stake. The government freezed the dividend Cairn Energy received from Cairn India to collect tax and in 2018 the tax department sold some of Cairn Energy’s stake in Cairn India.


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