In a step additional for decision of retrospective tax disputes, the federal government has accepted Cairn Energy Plc’s undertakings to indemnify the previous towards future claims and withdraw any pending litigation or continuing earlier than any discussion board in order to settle their retrospective tax circumstances, officers mentioned.
Earlier this month, the corporate gave the required undertakings indemnifying the Centre towards future claims. The authorities has now accepted this and issued Cairn the procedural kind which commits to refund the tax collected, an official mentioned.
Following the retrospective modification to the Income-tax Act moved by the then UPA authorities in 2012, tax calls for had been raised in 17 circumstances, out of which tax quantity of Rs 8,100 crore has been collected for 4 circumstances. Out of this Rs 8,100 crore quantity, Rs 7,800 crore is Cairn’s quantity. Vodafone is but to submit its endeavor, the official mentioned.
The modification was in response to a Supreme Court verdict which had held that Vodafone can’t be taxed for a 2007 transaction that concerned its buy of a 67 per cent stake in Hutchison Whampoa for $11 billion. Later, in 2014, the UPA authorities once more used the identical part to boost tax demand towards Cairn Energy Plc for restructuring executed in 2006.
This August, the NDA-led authorities introduced within the Taxation Laws (Amendment) Act, 2021, stating that no tax demand shall be raised for any oblique switch of Indian belongings if the transaction befell earlier than May 28, 2012.
Cairn is now anticipated to start out withdrawing all circumstances in worldwide courts. After this, the corporate can be issued refunds and the withdrawal of circumstances might take as much as three-four weeks.
The authorities final month notified guidelines that when adhered to will result in it withdrawing tax calls for raised utilizing the 2012 retrospective tax regulation and any tax collected within the enforcement of such demand being paid again. For this, firms had been required to indemnify the Centre towards future claims and withdraw any pending authorized proceedings.
On November 3, Cairn mentioned it has entered into undertakings with the Centre as a way to take part within the scheme launched by the Taxation Laws (Amendment) Bill 2021, permitting the refund of taxes beforehand collected from Cairn in India.