Final hearing in Cairn Energy Plc’s challenge to a Rs 10,247 crore retrospective tax demand raised by India will begin in August in The Hague, the British firm said on Tuesday.
The three-member international arbitration tribunal “has stated that it will make appropriate arrangements to progress with the drafting of the award as expeditiously as possible after the final hearing,” the company said in its preliminary results announcement.
Cairn had initiated an international arbitration after Indian Government in 2014 used a two-year old law to raise a Rs 10,247 crore demand on a decade old internal reorganisation of the company’s unit in the country.
The 2012 law gave the Government powers to impose taxes retrospectively.
“International arbitration proceedings are well advanced with the final hearing of Cairn’s claim under the UK-India Bilateral Investment Treaty scheduled for August 2018 in The Hague,” the company said.
Following the draft assessment order of January 2014, the tax department attached the company’s residual 9.8 per cent shares in its erstwhile subsidiary, Cairn India, and confiscated $104.7 million dividend it was due to receive. Also, a Rs 1,590 crore income tax refund was also confiscated. Billionaire Anil Agarwal-led Vedanta Group had acquired Cairn India from the British firm in 2011. The company has since merged with Vedanta Ltd, in which Cairn Energy now holds about 5 per cent shares.
“In addition to resolution of the retrospective tax dispute, Cairn’s request for relief to the arbitration panel is seeking damages equal to the value of Group’s residual shareholding in Cairn India Ltd in 2014 plus further assets seized since (approximately $1.3 billion),” the statement said.
The company said while it is restricted from selling the shares in Vedanta Ltd, title to the shares remains with the company.