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Cairn drops lawsuits in US, UK;  Complete the formalities in Paris, the Netherlands

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Cairn drops lawsuits in US, UK; Complete the formalities in Paris, the Netherlands

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UK firm Cairn Energy Plc has dropped lawsuits against the Indian government and its entities in the US and other places and is set to go out of business in Paris and the Netherlands to recover around 7,900 crore of rupees that were collected from him to apply a retrospective tax claim.

As part of a settlement reached with the government over the seven-year-old dispute over the overdue levy of taxes, the company – now known as Capricorn Energy PLC – has initiated proceedings to withdraw the lawsuits it she had brought proceedings in several jurisdictions to enforce an international law arbitration award which had annulled the levy of Rs 10,247 crore in retrospective taxes and ordered India to reimburse the money already received.

Two sources with direct knowledge of the case said Cairn on November 26 withdrew her lawsuit against Mauritius for recognition of the arbitral award and took similar action in courts in Singapore, UK. United and Canada. On December 15, she sought and obtained the “willful dismissal” of a lawsuit she had brought in a New York court to seize the assets of Air India in order to recover money owed by the government. On the same day, she took a similar step in a Washington court where she sought recognition of the arbitral award.

Recognition of the arbitration award is the first step before any enforcement proceedings such as the seizure of assets can be initiated. Sources said the critical trial in a French court, which had attached Indian properties to Cairn’s petition, was in the final stages of withdrawal. The work on paper should be completed in the next few days.

The seizure of Indian assets, including some apartments in Paris, in July used by Indian government staff triggered the abandonment of a 2012 amendment to the income tax law that gave taxpayers the power to go back 50 years and impose capital gains levies wherever ownership has changed. hands overseas, but business assets were in India. The tax department had used the 2012 legislation to levy Rs 10,247 crore in taxes on alleged capital gains made by Cairn during the reorganization of its business in India prior to its listing in 2006-07.

Cairn contested this claim, stating that all taxes owed during the reorganization, approved by all statutory authorities, had been duly paid. But the tax department in 2014 tied and then sold the residual shares Cairn held in the Indian unit, which was acquired in 2011 by the Vedanta group. He also withheld tax refunds and forfeited dividends owed to him to settle part of the tax claim. All of this totaled Rs 7,900 crore.

Sources said the paperwork for withdrawing a lawsuit in the Netherlands was also being finalized. Cairn last month said he had agreed to drop litigation to seize Indian properties in countries ranging from France to the UK as he accepted the Indian government’s offer to retroactively settle the tax dispute. relating to the collection of taxes.

Responding to the requirements of the new legislation which eliminates the levy of retrospective taxation, the company has made the required commitments indemnifying the Indian government against future claims and agreeing to drop all legal proceedings anywhere in the world. Seeking to repair India’s damaged reputation as an investment destination, the government enacted new legislation in August to remove Rs 1.1 lakh crore in pending claims against multinationals such as telecoms group Vodafone , pharmaceutical company Sanofi and brewer SABMiller, now owned by AB InBev, and Cairn.

About Rs 8,100 crore collected from businesses under the removed tax provision must be refunded if businesses agree to drop outstanding litigation, including interest and penalty claims. Of this amount, 7,900 crore rupees is owed only to Cairn. As a result of this, the government last month notified rules which, when followed, will lead the government to withdraw tax claims raised using the 2012 retrospective tax law and any taxes collected in the framework of the application of this request is reimbursed.

For this, companies are required to indemnify the Indian government against future claims and to withdraw any pending legal proceedings. Cairn made that commitment and is now out of business.

The 2012 legislation was used to collect a cumulative Rs 1.10 lakh crore of tax on 17 entities, including UK telecommunications giant Vodafone, but nearly 98% of the Rs 8,100 crore recovered to enforce such a request. came only from Cairn. In December, an international arbitration tribunal overturned the rupee 10,247 crore levy on a 2006 Cairn’s India reorganization before it was listed, and called on the Indian government to return the value of the shares seized and sold, the dividend confiscated. and the tax refund withheld. This amount totaled over $ 1.2 billion in interest and penalties.

The government initially refused to honor the award, forcing Cairn to identify $ 70 billion in US Indian assets in Singapore to enforce the ruling, including bringing airline Air India Ltd to US court. in May. In July, a French court cleared the way for Cairn to seize property owned by the Indian government in Paris. All of these disputes are being dropped one by one, the sources added.

Cairn drops lawsuits in US, UK; Complete the formalities in Paris, the Netherlands

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