India digs heels in Cairn arbitration matter, to file appeal against Rs 10,000-cr award: Sources
The government is likely to file an appeal against the Cairn arbitration award contesting its sovereign rights to tax, sources said. An international tribunal in December, had unanimously ruled that India violated its obligations under the UK-India Bilateral Investment Treaty in 2014, when the income tax department had slapped a Rs 10,247-crore tax assessment using legislation that gave it powers to levy taxes retrospectively.
Soon after seeking Rs 10,247 crore in taxes over alleged capital gains made by the company over a 2006-07 reorganisation of India business before its listing, the tax department seized Cairn’s residual 10 per cent stake in Cairn India.
In a ruling, which Cairn had previously described as “final and binding”, the tribunal had ordered New Delhi to pay USD 1.2 billion in damages, plus interest and costs, to compensate Cairn for the shares — long sold off by the tax department — as well as confiscated dividends and withheld tax refunds.
