Cairn case: PSBs not asked to withdraw funds from foreign currency accounts, says govt

India had seized and bought shares of Cairn in its erstwhile India unit, confiscated dividend due and withheld tax refunds to recuperate the tax demand it had levied two years after passing a legislation in 2012 that gave it powers to levy tax retrospectively. (File picture)

The Centre on Sunday refuted experiences that it has purportedly requested state-owned banks to withdraw funds from international foreign money accounts overseas in anticipation of the potential seizure of such accounts by Cairn Power.

“These are completely incorrect experiences which weren’t based mostly on true info. Sure vested events seem to have orchestrated such deceptive reporting, which regularly depends upon unnamed sources and presents a lopsided image of factual and authorized developments within the case,” finance ministry mentioned in a press release.

The federal government additionally confirmed that it filed an utility within the Everlasting Courtroom of Arbitration at The Hague on March 22, 2021, looking for setting apart of the arbitral award that favoured Cairn Power.

In December 2020, The Hague tribunal not solely invalidated India’s $2.74-billion 2015 tax declare on the Edinburgh-headquartered power main, but in addition ordered it to return as much as $1.4 billion in funds withheld, plus curiosity and prices, to the agency. The tribunal dominated that India had breached its obligations to Cairn below the UK-India Bilateral Funding Treaty.

On Sunday, the ministry reiterated that the tribunal had “improperly exercised jurisdiction over a nationwide tax dispute that the Republic of India by no means supplied and/or agreed to arbitrate. The federal government added that it was dedicated to “pursuing all authorized avenues to defend its case on this dispute worldwide”.

India had seized and bought shares of Cairn in its erstwhile India unit, confiscated dividend due and withheld tax refunds to recuperate the tax demand it had levied two years after passing a legislation in 2012 that gave it powers to levy tax retrospectively.

Even because it was difficult the award, the federal government of India apparently needed Cairn to settle the dispute utilizing the Vivad se Vishwas scheme; below the scheme, the corporate must pay round half the quantity due sans curiosity and penalties in instances the place the tax division has misplaced a case in a discussion board and filed an enchantment, as the moment one. It isn’t clear if Cairn has even been open to this method.

The federal government additionally said that the CEO and different representatives of Cairn have approached the federal government for discussions to resolve the matter. Constructive discussions have been held and the federal government stays open for an amicable answer to the dispute inside the nation’s authorized framework, it added.

UK’s Cairn Power has reportedly recognized $70 billion of Indian belongings abroad for potential seizure to gather $1.72 billion due from the federal government — a transfer if profitable will put India in league with Pakistan and Venezuela which confronted related enforcement motion over failure to pay arbitration awards. The belongings recognized reportedly vary from Air India’s planes to vessels belonging to the Shipping Corporation of India, and properties owned by state-owned banks to grease and fuel cargoes of PSUs, experiences steered.

The ministry mentioned: “The Authorities has raised a number of arguments that warrant setting apart of the award together with however not restricted to: (i) the arbitral tribunal improperly exercised jurisdiction over a nationwide tax dispute that the Republic of India by no means supplied and/or agreed to arbitrate; (ii) the claims underlying the award are based mostly on an abusive tax avoidance scheme that had been a gross violation of Indian tax legal guidelines, thereby depriving Cairn’s alleged investments of any safety below the India-UK bilateral funding treaty; and (iii) the award improperly ratifies Cairn’s scheme to realize double non-taxation, which was designed to keep away from paying taxes anyplace on the earth, a major public coverage concern for governments worldwide. This continuing is pending”.