Cairn Energy wins $1.2bn arbitration ruling over tax dispute with India
New Delhi — Cairn Energy has won an arbitration over a tax dispute with the Indian government, serving a double blow to Prime Minister Narendra Modi’s government after a similar loss against Vodafone.
An international arbitration tribunal ruled that India’s tax claim of $1.2bn in past taxes was not a valid demand, people with knowledge of the matter said, asking not to be identified.
The tribunal has also asked India to pay the funds withheld along with the interest to the Scottish oil explorer for seizing dividends, tax refunds and the sale of shares to partly recover the dues. India can appeal.
A spokesperson for the tax department did not answer a call made during business hours.
Cairn Energy’s victory will be a second loss for India in an international arbitration after Vodafone won a years-long tax dispute with the Indian government in September over a controversial $3bn tax demand.
The 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.
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