Amid row with Vodafone and Cairn Energy, Centre introduces bill to amend retrospective tax demands
New Delhi | Jagran Business Desk: Following the row with Vodafone and Cairn Energy, the central government on Thursday introduced a bill in the Lok Sabha to bury retrospective tax demands. Finance Minister Nirmala Sitharaman introduced The Taxation Laws (Amendment) Bill, 2021 in the Lok Sabha which seeks to withdraw tax demands made on indirect transfer of Indian assets prior to May 28, 2012.
"In the past few years, major reforms have been initiated in the financial and infrastructure sector which has created a positive environment for investment in the country. However, this retrospective clarificatory amendment and consequent demand created in a few cases continues to be a sore point with potential investors," the government said.
"The country today stands at a juncture when quick recovery of the economy after the COVID-19 pandemic is the need of the hour and foreign investment has an important role to play in promoting faster economic growth and employment," it added.
Cairn Energy Plc and Vodafone Group of the United Kingdom (UK) had won international arbitrations against levy of retrospective taxes on them. Later, the Cairn Energy also seized Indian state-owned properties in Paris to recover the USD 1.7 billion arbitration award.
However, the central government had said that it has received a notice or any order from any French Court over the seizure. It also said that it has applied to set aside the international arbitral award in The Hague Court of Appeal.
On June 11, a French Court had agreed to Cairn's application to freeze (through judicial mortgages) residential real estate owned by the Indian government in central Paris.
This came after a three-member international arbitration tribunal in December last year unanimously overturned levy of taxes on Cairn retrospectively and ordered refund of shares sold, dividend confiscated and tax refunds withheld to recover such demand.
With the Indian government refusing to honour the award, Cairn has moved in multiple overseas jurisdictions to enforce the award by seizing Indian assets.
Last month, Cairn brought a lawsuit in the US District Court for the Southern District of New York pleading that Air India is controlled by the Indian government so much that they are 'alter egos' and the airline should be held liable for the arbitration award.
Similar lawsuits are likely to be brought in other countries, primarily with high-value assets. The arbitration award has been registered in countries such as the US, UK, Canada, Singapore, Mauritius, France and the Netherlands.
Cairn has identified USD 70 billion of Indian assets overseas for the potential seizure to collect award, which now totals to USD 1.72 billion after including interest and penalty.
(With PTI inputs)
Posted By: Aalok Sensharma