UK-based Cairn Energy PLC said on Tuesday that it will drop litigations to seize Indian properties in countries ranging from France to the US, within a couple of days of getting USD 1 billion refund, resulting from the scrapping of a retrospective tax law.
The firm, which gave India its biggest onland oil discovery, termed the legislation which was passed last month to cancel a 2012 tax policy as “bold”. The 2012 tax policy gave the Tax department power to go back up to 50 years and slap capital gains levies wherever ownership had changed hands overseas, but business assets were in India.
“The offer to return money seized to enforce retrospective tax demand in lieu of dropping all litigations against the government is acceptable to us,” Cairn CEO Simon Thomson told PTI.
Last month, the government enacted new legislation to drop ₹1.1 lakh crore in outstanding claims against companies like Vodafone group, brewer SABMiller, and Sanofi, which are now owned by AB InBev and Cairn, so that India’s reputation as an investment destination would be restored.
About ₹8,100 crore, which were collected from various companies under the scrapped tax provision are to be refunded, if the firms agree to drop outstanding litigation, including claims for interest and penalties. Out of the ₹8100 crore, ₹7,900 crore is due to Cairn.
“Once we get to final resolution, part of that resolution is us dropping everything in terms of litigation. We can do that within a very short period of time, just a matter of a couple of days or something,” Thomson said. He added that Cairn is preparing on the basis of getting the resolution quickly, so that all cases would be dropped and “putting all this behind.”
He said all enforcement proceedings which were brought because of GoI’s refusal to honour an international arbitration award asking it to return the value of money seized to enforce the retrospective tax demand, will be dropped.
“Everything will be dropped. There will be no more litigation, that will be it. It will clear the matter up,” Thomson said.
Cairn said in its half-yearly report released on Tuesday that it will return up to USD 700 million out of the ₹7,900 crore (USD 1.06 billion) it is supposed to get from the Indian government, to shareholders through ‘special dividend and buyback.’
(With inputs from Agencies)