British company cairn energy threatens to seize Indian government assets. The energy company made the threat after winning a long-running corporate tax case. This information was given in a report of BBC online.
Cairn Energy had filed a case against the Government of India in the International Court of Arbitration for unjustly imposing the tax on old transactions.
Cairn threatened to confiscate the property if they did not pay the compensation. They have already begun to identify assets that can be confiscated.
According to Indian media reports, the dispute between the two sides began in 2006-07. Cairn Energy the parent company handed over shares of Cairn India Holdings to Cairn India during the process of internal restructuring.
In this process, Cairn Energy has evaded tax on capital income.
The Income Tax Department has demanded a tax of $2.4 billion from the company. Cairn filed a case in the Income Tax Appellate Tribunal (ITAT) and the Delhi High Court for refusing to pay taxes. Cairn lost the case in the ongoing ITAT.
In 2011, Cairn India sold a majority stake in Cairn India to Vedanta. However, they kept about 10 percent of the shares in their hands. The Income Tax Department of India confiscated the shares and dividends in 2014 amid a legal battle over arrears of tax.
Cairn then approached the International Court of Arbitration. After examining the documents, analyzing the laws and agreements of the Government of India, the tribunal unanimously ordered Cairn to pay compensation.
The ruling said India’s central government had violated the terms of the UK-India Bilateral Investment Treaty.
As a result of this verdict, the Indian government has no way to get the $2.4 billion demanded from the British company Cairn; Instead, the court fined India $1.2 billion.