UK-based Cairn Energy PLC on Wednesday said it has agreed to drop litigations to seize Indian properties in countries ranging from France to the UK as it has accepted the Indian Government's offer to settle tax dispute relating to the levy of taxes retrospectively.
Meeting the requirements of new legislation that scraps levy of retrospective taxation, the company has given required undertakings indemnifying the Indian Government against future claims as well as agreeing to drop any legal proceedings anywhere in the world.
The Government now has to accept this and issue Cairn a so-called Form-II, that will commit it to refund the tax collected to enforce the retrospective tax demand. Following the issue of Form-II, Cairn will withdraw legal proceedings and will get a refund of Rs 7,900 crore.
Cairn said its undertaking shall be treated as having never been furnished if the Principal Commissioner for Income Tax either rejects the undertaking given by it in Form No.1 under rule 11UE(1) or the intimation of withdrawal given under rule 11UF(3), or declines to grant the refund.
Only after the refund is issued will the new legislation will be seen as working in the eyes of foreign investors.
In a statement, Cairn said it has "entered into undertakings with the Government of India in order to participate in the scheme introduced by recent Indian legislation, the Taxation Laws (Amendment) Bill 2021, allowing the refund of taxes previously collected from Cairn in India."
"Subject to certain conditions, the Taxation Amendment Act nullifies the tax assessment originally levied against Cairn in January 2016 and orders the refund of Rs 7,900 crore which was collected from Cairn in respect of that assessment," it said.
Seeking to repair India's damaged reputation as an investment destination, the government in August enacted new legislation to drop Rs 1.1 lakh crore in outstanding claims against multinationals such as telecom group Vodafone, pharmaceuticals company Sanofi and brewer SABMiller, now owned by AB InBev, and Cairn.
