Responding to reports that Cairn has identified substantial Indian assets for attachment, informed sources in the government told FE that the Centre is yet to receive any formal notice of any such claims and “hence these reports are purely in the realm of speculation.”
“The government is well aware of its legal rights and will defend its case in courts should such proceedings materialize. It is equally confident of winning its appeal in The Hague,” a government source said. Sources said Cairn did not pay a single rupee tax anywhere in the world in respect of the impugned transactions. Cairn had also lost its appeal before the Income-tax Tribunal, they pointed out.
According to media reports, UK’s Cairn Energy has identified $70 billion of Indian assets overseas for potential seizure to collect $1.72 billion due from the government — a move if successful will put India in league with Pakistan and Venezuela which faced similar enforcement action over failure to pay arbitration awards.
The assets identified range from Air India’s planes to vessels belonging to the Shipping Corporation of India, and properties owned by state-owned banks to oil and gas cargoes of PSUs, PTI reported.
India recently appealed against the Cairn Energy arbitration verdict at The Hague, challenging the $1.4-billion award.
New Delhi’s 2012 law empowering itself to make tax demands concerning cross-border deals all the way back to 1962, citing ‘underlying Indian assets’ has been exposed as a misadventure. In December 2020, The Permanent Court of Arbitration at The Hague on not only invalidated India’s $2.74-billion 2015 tax claim on Cairn Energy, but also ordered it to return up to $1.4 billion in funds withheld, interest and costs, to the firm.