Cairn Energy has won the arbitration against the Indian government over a tax dispute arising from demand of $1.6 billion from tax department on listing of Indian operations back in 2007.
Cairn Energy PLC is one of Europe’s leading independent oil and gas exploration and development companies and is listed on the London Stock Exchange.
Cairn has discovered and developed oil and gas reserves in a variety of locations around the world. Cairn Energy has a primary listing on the London Stock Exchange and is a constituent of the FTSE 250 Index.
The international tribunal ruled that India’s demand was in breach of a India-UK bilateral investment protection pact, and told New Delhi to pay Rs 8,000 crore as damages to the oil company, according to the Business Standard.
The Income Tax department had alleged that Cairn had then made a capital gain of Rs 24,503 crore while restructuring its corporate group.
The Indian government has been asked to pay Cairn Rs 8,000 crore in damages, which include the shares attached by the Income Tax Department in January 2014 and sold in 2018 to partially recover the tax dues.
Cairn Energy held 4.95 per cent stake in mining major Vedanta Ltd which the Income Tax Department attached after issuing a tax demand to the British firm in 2014.
The government has been asked to pay damages at the share value of Rs 330 in 2014 instead of the Rs 220-240 per share price on which it was actually sold by the Income-Tax Department in 2018, in tranches.
The damages also include Rs 1,590 crore of tax refund due to the British comp.
Cairn Energy’s victory will be a second loss for India in an international arbitration after Vodafone Group Plc won a years-long tax dispute with the Indian government in September over a controversial $3 billion tax demand.
The Indian government’s 2012 budget retrospectively amended the tax code, giving itself the power to go after M&A deals all the way back to 1962 if the underlying asset was in India.
