Cairn tax row: I-T dept con­fis­cates div­i­dend, re­fund

Hindustan Times ST (Jaipur) - - World - Press Trust of In­dia feed­back@livemint.com

The in­come tax de­part­ment has or­dered co­er­cive ac­tion against Cairn En­ergy of UK, in­clud­ing tak­ing away over ₹2,000-crore div­i­dend and tax re­fund, to re­cover part of the ₹10,247-crore ret­ro­spec­tive tax.

This fol­lows the Bri­tish oil firm los­ing in an in­ter­na­tional ar­bi­tra­tion tri­bunal its chal­lenge against In­dia’s I-T de­part­ment tak­ing co­er­cive ac­tion to re­cover the tax dues.

A top source said the de­part­ment has al­ready ad­justed ₹1,500 crore of tax re­fund that was due to Cairn En­ergy Plc, against the prin­ci­pal amount.

On June 16, it sent a no­tice un­der sec­tion 226(3) of the In­come Tax Act to the com­pany’s erst­while sub­sidiary, Cairn In­dia Ltd (now Vedanta In­dia Ltd), say­ing what­ever was due to the Bri­tish firm in the form of div­i­dend should be trans­ferred to the govern­ment.

As much as $104 mil­lion or about ₹650 crore, in past and cur­rent div­i­dend, is due to the com­pany, the source said, adding, it was likely to be trans­ferred to the ex­che­quer by Tues­day.

Next, the de­part­ment will move to take the 9.8% resid­ual stake that Cairn En­ergy re­tains in Cairn In­dia even af­ter sell­ing the erst­while sub­sidiary to Vedanta.

The tri­bunal re­fused to en­ter­tain Cairn En­ergy’s pleas for re­strain­ing the I-T de­part­ment from tak­ing any co­er­cive ac­tion and or­der­ing Cairn In­dia to re­lease div­i­dend due to it, the source said.

The as­sess­ing of­fi­cer is in the process of draw­ing a cer­tifi­cate un­der the In­come Tax (Cer­tifi­cate Pro­ceed­ings) Rules, 1962 for re­cov­ery of tax, ac­cord­ing to which the tax re­cov­ery of­fi­cer will go ahead to at­tach the shares and sell them. How­ever, the sale might not hap­pen im­me­di­ately as the tax de­part­ment will wait for the best price, the source said, adding, the shares can be sold to LIC or Vedanta whoso­ever quotes the best price.

The I-T de­part­ment had on March 31 is­sued a no­tice to Cairn En­ergy seek­ing ₹10,247-crore tax and set June 15 as the dead­line for pay­ment. This no­tice fol­lowed Cairn En­ergy los­ing an ap­peal in the tax tri­bunal ITAT against the levy.

Cairn En­ergy in an emailed state­ment con­firmed the tax de­part­ment’s move. “On June 16, 2017 the In­dian In­come Tax De­part­ment (IITD) is­sued an or­der to Vedanta In­dia Ltd (VIL) di­rect­ing it to pay over any sums due to Cairn. Sums due to Cairn from VIL now to­tal $104 mil­lion, in­clud­ing his­tor­i­cal div­i­dends of $53 mil­lion and a fur­ther div­i­dend of $51 mil­lion af­ter the merger of CIL and VIL,” it said.

The com­pany, how­ever, said it will con­tinue with the in­ter­na­tional ar­bi­tra­tion pro­ceed­ings against the ret­ro­spec­tive tax de­mand.

MINT/FILE

Vedanta Re­sources chair­man Anil Agar­wal

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