FM Sitharaman: India’s authority to tax questioned in $1.4 billion Cairn case; ‘our duty to appeal’

By: |
March 5, 2021 4:19 PM

Last year, the government lost two high-profile arbitrations over the levy of taxes on British firms, using legislation that gave it the power to levy taxes with retrospective effect.

She did not make any direct reference to appealing against the Cairn award.She did not make any direct reference to appealing against the Cairn award.

Finance Minister Nirmala Sitharaman on Friday indicated the government’s intent to appeal against an arbitration panel asking India to return USD 1.4 billion to UK’s Cairn Energy Plc, saying it is her “duty” to appeal in cases where the nation’s sovereign authority to tax is questioned.

Last year, the government lost two high-profile arbitrations over the levy of taxes on British firms, using legislation that gave it the power to levy taxes with retrospective effect.

While the government has already challenged in a Singapore court an international arbitration tribunal verdict that overturned its demand for Rs 22,100 crore in back taxes from Vodafone Group Plc, it hasn’t yet done so against a December 21 award asking India to return the value of shares seized and sold, divided, confiscated and tax refund stopped to adjust a Rs 10,247 crore tax demand on Cairn.

“We have made our position clear on retrospective taxation. We have repeated it in 2014, 2015, 2016, 2017, 2019, 2020, till now. I don’t see any lack of clarity,” she said, referring to the Modi government’s stand of not raising any new tax demand using the 2012 legislation.

“Where I find arbitration award questioning India’s sovereign authority to tax… if there is a question about the sovereign right to tax, I will appeal, it’s my duty to appeal,” she said. “An arbitration award, which questions the authority of government to tax, I will appeal on that.”

She did not make any direct reference to appealing against the Cairn award.

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