- Friday, May 03, 2024
By: Shubham Ghosh
THE Narendra Modi government has asked a court in Washington to dismiss the suit by Britain’s Cairn Energy that seeks enforcement of an arbitral award worth $1.2 billion, saying it had sovereign immunity under the American law.
In May, Cairn had asked a US federal court to force Air India to pay an arbitration award of $1.26 billion that the firm had bagged in December.
On August 13, the Indian government filed a ‘Motion to Dismiss’ petition in the US District Court for the District of Columbia, saying it lacked subject matter jurisdiction in the dispute between Cairn and the Indian tax authority, according to a filing seen by the Press Trust of India.
The development comes a week after the government enacted legislation to scrap a tax rule that gave the tax department power to go 50 years back and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India.
The rule had been used to levy a cumulative Rs 1.10 lakh crore ($14.7 billion) of tax on 17 entities, including Rs 10,247 crore ($1.37 billion) on Cairn.
According to the officials, rules for withdrawal of such tax demands are in the process of being framed.
“One of the requirements for the dropping of the retrospective tax demands is that the parties concerned have to give an undertaking for withdrawal of all cases against the government/tax department. So, while all this is in process, the government is obligated to respond in any legal matter where there is a time bar for doing so,” an official said.
Cairn had challenged the tax demand before an international arbitration tribunal, which in December last year overturned the same and ordered the government to refund the money collected. The government initially refused to return $1.2 billion, forcing Cairn to take action to recover that money through a seizure of Indian assets overseas.
(PTI)
