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My duty to appeal: FM after Cairn wins $1.4 billion Cairn arbitration award in tax dispute

By Priyanka Verma 
Updated Date

Finance Minister Nirmala Sitharaman on Friday hinted that the government intends to appeal against an arbitration panel’s order asking India to pay over $1.4 billion to UK’s Cairn Energy in a tax dispute. “Where I find arbitration award questioning India’s sovereign authority to tax…if there is a question about the sovereign right to tax…it’s my duty to appeal,” she added.

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Last year, the government lost two high-profile arbitrations over the levy of taxes on British firms, using legislation that gave it the power to levy taxes with retrospective effect.

While the government has already challenged in a Singapore court an international arbitration tribunal verdict that overturned its demand for Rs 22,100 crore in back taxes from Vodafone Group Plc, it hasn’t yet done so against a December 21 award asking India to return the value of shares seized and sold, divided, confiscated and tax refund stopped to adjust a Rs 10,247 crore tax demand on Cairn.

“We have made our position clear on retrospective taxation. We have repeated it in 2014, 2015, 2016, 2017, 2019, 2020, till now. I don’t see any lack of clarity,” she said, referring to the Modi government’s stand of not raising any new tax demand using the 2012 legislation.

“Where I find arbitration award questioning India’s sovereign authority to tax… if there is a question about the sovereign right to tax, I will appeal, it’s my duty to appeal,” she said. “An arbitration award, which questions the authority of government to tax, I will appeal on that.”

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She did not make any direct reference to appealing against the Cairn award.

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