February 19, 2021 3:00:12 am
To discuss the issue of retrospective tax demand after winning the arbitration award against the government, Cairn Energy’s chief executive officer Simon Thomson met Finance Secretary Ajay Bhushan Pandey on Thursday. Terming it as a constructive dialogue, Thomson said it is an ongoing dialogue with the government.
“We had a constructive dialogue and the dialogue is ongoing,” Thomson told reporters after the meeting. When asked about details, he said he “can’t comment more on the meeting.”
Cairn’s CEO had initially sought a meeting with Finance Minister Nirmala Sitharaman but it wasn’t formalised. Thursday’s meeting was attended by Finance Secretary, CBDT Chairman PC Mody and other senior officials from the tax department. The Finance Minister is learnt to have told the officials before the meeting to hear out Cairn’s proposals on the matter. The government has been contemplating several measures including filing an appeal before the 90-day appeal window ending in March since it believes the sovereign right for taxation needs to be emphasised. The government, however, has not ruled out an out-of-court settlement through the dispute resolution scheme of Vivad se Vishwas, if the company comes onboard for it, a source said.
All eyes on govt move
Cairn CEO reached out to the government for a positive resolution of the retrospective tax demand case. The key development that will be tracked now is whether the government will appeal further or opt for an out-of-court settlement.
Before the meeting, Thompson said the company wants a positive resolution. “We are pleased that it has come to an end (and) the award has been granted. Our shareholders want this to be resolved as quickly as possible and that is why we are here to have a discussion today,” he said.
He refused to comment on the government challenging the award, saying the company is looking forward to “a positive resolution.” In December, Cairn Energy had won a major relief as the Permanent Court of Arbitration at The Hague had ruled that the Indian government’s retrospective tax demand against the global oil and gas major was “inconsistent” with the UK-India bilateral treaty. The international tribunal had ruled that India’s retrospective tax demand was “in breach of the guarantee of fair and equitable treatment”.
In a petition, Cairn Energy plc and its UK holding company have approached the US district court for the District of Columbia to recognise and confirm the December award of the Permanent Court of Arbitration at The Hague.
The judgment has asked the government to pay $1.2 billion (roughly Rs 8,800 crore) to Cairn Energy Plc.
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