Sale by govt of Cairn Energy’s ‘attached’ shares a bad decision: Experts

Faced with prospect of its assets across the globe being seized just like Pakistan and Venezuela, the government decided to scrap retrospective taxation but the international embarrassment could have been avoided had ‘attached’ shares of Britain’s Cairn Energy Plc not been sold, according to tax and legal experts.

On Thursday, the government introduced a Bill in Parliament to scrap the tax rule that gave the tax department power to go 50 years back and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India. The 2012 legislation was used to levy a cumulative of Rs 1.10 lakh crore of tax on 17 entities, including UK telecom giant Vodafone, but substantial punitive action was taken only in the case of Cairn.

The income tax department not just sold Cairn’s near 10 per cent shareholding in its erstwhile Indian subsidiary but also seized its dividends totalling Rs 1,140 crore and stopped tax refunds of Rs 1,590 crore.