Retrospective tax: Cairn drops lawsuits in US, UK against Centre

As part of the settlement reached with the Centre to the seven-year old dispute over levy of back taxes, the company - now known as Capricorn Energy PLC - has initiated proceedings to withdraw lawsuits it had filed in many jurisdictions to enforce an international arbitration award which had overturned levy of Rs 10,247 cr retrospective taxes and ordered India to refund the money already collected.

Two sources with direct knowledge of the matter said Cairn on November 26 withdrew the lawsuit it had brought in Mauritius for recognition of the arbitration award and took similar measures in courts in Singapore, the UK and Canada. On December 15, it sought and got ‘voluntary dismissal’ of a lawsuit it had brought in a New York court to seize assets of Air India to recover the money due from the government. On the same day, it made a similar move in a Washington court where it was seeking recognition of the arbitration award. This is the first step before any enforcement proceedings like seizure of assets can be brought.

Sources said the critical lawsuit in a French court, which had attached Indian properties on the petition of Cairn, is in the final stages of withdrawal. Paper work is expected to get completed in the next couple of days.

The attachment of Indian assets, including some flats in Paris, in July used by the Centre staff had triggered scrapping of a 2012 amendment to the Income Tax Act that gave taxmen powers to go back 50 years and slap capital gains levies wherever ownership had changed hands overseas but business assets were in India.