New Delhi: The Indian government has asked a Washington court to dismiss the UK court. cairn energy The lawsuit sought to enforce the $1.2 billion arbitral award, saying it has sovereign immunity under US law.
Cairn had in May asked a US federal court to force Air India to award an arbitration award of $1.26 billion, which the company won in December.
The government filed a ‘motion to dismiss’ petition in the US District Court for the District of Columbia on August 13, contending that the dispute between Cairn and the Indian tax authority lacked subject matter jurisdiction, as seen by PTI. According to a filing.
It comes a week after the government legislated to do away with a tax rule that had given the tax department the power to go back 50 years and levy capital gains where ownership changed hands overseas, but The commercial assets were in India. That rule was used to levy a total tax of Rs 1.10 lakh crore on 17 entities, including Rs 10,247 crore on Cairn.
Officials said that the process of framing rules to withdraw such tax demands is underway.
“One of the requirements for dropping the retrospective tax demands is that the parties concerned have to give an undertaking to withdraw all cases against the government/tax department. Therefore, while all this is in process, the government has to respond. bound in any legal matter where there is a time limit to do so,” explained an official.
Cairn had challenged the tax demand before an international arbitration tribunal, which in December last year overturned it and ordered the government to refund the money collected.
The government initially refused to refund the $1.2 billion, forcing Cairn to take action to recover that money through the confiscation of Indian assets abroad.
In May, it took flag carrier Air India Ltd to a US court and last month a French court order to confiscate immovable assets belonging to the Indian government in Paris.
It had argued before a US court that the Indian government has so much control over Air India that they are “alter egos” and the airline company should be liable for an arbitration award.
In response, the government filed a motion of dismissal last week, citing the protections afforded by the US Foreign Sovereign Immunity Act of 1976.
India said in the filing that the court “lacked subject-matter jurisdiction under the Foreign Sovereign Immunity Act (FSIA) because India has never waived its sovereign immunity and, likewise, never offered – let alone agreed – To mediate the present dispute with the petitioners”.
“India has never explicitly and implicitly excluded judicial review or conferring special competence to decide these questions to an arbitral tribunal,” the filing said, implying that Cairn’s US law could not satisfy any exception of sovereign immunity under
Officials said the government could not wait for the tax dispute to close as per the new law and had to file a motion, failing which the adverse court order would further embarrass.
Cairn had in February asked a US court to recognize and confirm the December 2020 award against India from the Permanent Court of Arbitration in the Netherlands.
On Monday, Finance Minister Nirmala Sitharaman had said that the rules will do away with retrospective tax demands made on companies such as Cairn Energy Plc And Vodafone plc will be ready soon.
The government has to refund around Rs 8,100 crore which it collected using the retro tax law. Most of this Rs 7,900 crore goes to Cairn Energy alone.
While in other cases, it did not take punitive measures to recover the tax demand, the Income Tax Department sold nearly 10 per cent stake of Cairn in its erstwhile Indian subsidiary and also forfeited its total dividend of Rs 1,140 crore and Rs 1,590 crore. Withheld tax refund of Rs. .
Vodafone had also received a favorable arbitration award against tax of Rs 22,100 crore.
In both cases, the government appealed against the awards in a Singapore court in Vodafone’s case and in The Hague’s case in Cairn. Singapore was the seat of Vodafone arbitration and so was The Hague in Cairn’s case.
Asked whether the government would withdraw the challenge to the awards after the law is passed, Sitharaman said, “I will abide by the law passed in Parliament”.
“I will abide by the characteristics of the law. Nothing beyond that,” she said without elaborating.
The finance minister said that his ministry officials are discussing closure, refund and settlement of retro tax cases with Cairn and Vodafone.
Cairn had in May asked a US federal court to force Air India to award an arbitration award of $1.26 billion, which the company won in December.
The government filed a ‘motion to dismiss’ petition in the US District Court for the District of Columbia on August 13, contending that the dispute between Cairn and the Indian tax authority lacked subject matter jurisdiction, as seen by PTI. According to a filing.
It comes a week after the government legislated to do away with a tax rule that had given the tax department the power to go back 50 years and levy capital gains where ownership changed hands overseas, but The commercial assets were in India. That rule was used to levy a total tax of Rs 1.10 lakh crore on 17 entities, including Rs 10,247 crore on Cairn.
Officials said that the process of framing rules to withdraw such tax demands is underway.
“One of the requirements for dropping the retrospective tax demands is that the parties concerned have to give an undertaking to withdraw all cases against the government/tax department. Therefore, while all this is in process, the government has to respond. bound in any legal matter where there is a time limit to do so,” explained an official.
Cairn had challenged the tax demand before an international arbitration tribunal, which in December last year overturned it and ordered the government to refund the money collected.
The government initially refused to refund the $1.2 billion, forcing Cairn to take action to recover that money through the confiscation of Indian assets abroad.
In May, it took flag carrier Air India Ltd to a US court and last month a French court order to confiscate immovable assets belonging to the Indian government in Paris.
It had argued before a US court that the Indian government has so much control over Air India that they are “alter egos” and the airline company should be liable for an arbitration award.
In response, the government filed a motion of dismissal last week, citing the protections afforded by the US Foreign Sovereign Immunity Act of 1976.
India said in the filing that the court “lacked subject-matter jurisdiction under the Foreign Sovereign Immunity Act (FSIA) because India has never waived its sovereign immunity and, likewise, never offered – let alone agreed – To mediate the present dispute with the petitioners”.
“India has never explicitly and implicitly excluded judicial review or conferring special competence to decide these questions to an arbitral tribunal,” the filing said, implying that Cairn’s US law could not satisfy any exception of sovereign immunity under
Officials said the government could not wait for the tax dispute to close as per the new law and had to file a motion, failing which the adverse court order would further embarrass.
Cairn had in February asked a US court to recognize and confirm the December 2020 award against India from the Permanent Court of Arbitration in the Netherlands.
On Monday, Finance Minister Nirmala Sitharaman had said that the rules will do away with retrospective tax demands made on companies such as Cairn Energy Plc And Vodafone plc will be ready soon.
The government has to refund around Rs 8,100 crore which it collected using the retro tax law. Most of this Rs 7,900 crore goes to Cairn Energy alone.
While in other cases, it did not take punitive measures to recover the tax demand, the Income Tax Department sold nearly 10 per cent stake of Cairn in its erstwhile Indian subsidiary and also forfeited its total dividend of Rs 1,140 crore and Rs 1,590 crore. Withheld tax refund of Rs. .
Vodafone had also received a favorable arbitration award against tax of Rs 22,100 crore.
In both cases, the government appealed against the awards in a Singapore court in Vodafone’s case and in The Hague’s case in Cairn. Singapore was the seat of Vodafone arbitration and so was The Hague in Cairn’s case.
Asked whether the government would withdraw the challenge to the awards after the law is passed, Sitharaman said, “I will abide by the law passed in Parliament”.
“I will abide by the characteristics of the law. Nothing beyond that,” she said without elaborating.
The finance minister said that his ministry officials are discussing closure, refund and settlement of retro tax cases with Cairn and Vodafone.
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