Govt sold $216 mn of Vedanta shares, says Cairn Energy
IT dept may make further sales, says firm
NEW DELHI: British energy firm Cairn Energy Plc Monday said the Indian government has sold some of the shares it owned in Vedanta Ltd, that were earlier attached in a tax dispute, for $216 million.
The Edinburgh-based company had received 5% stake and preference shares in Vedanta in exchange for its residual stake in its former subsidiary Cairn India, which has been merged with Vedanta.
Citing an income tax department communication, Cairn Energy said after the sale, the attached shares amount to a 3% stake in Vedanta, adding, “It is possible that the Indian income tax department may make further sales.”
Cairn Energy, which sold its Indian arm to Vedanta’s Ltd’s parent Vedanta Resources Plc in 2011, retained roughly 10% stake in the unit, which was later attached by the tax department to recover alleged tax dues arising from a retrospective change in tax law in 2012.
The tax department is seeking to recover capital gains tax on a 2006 internal reorganization of Cairn India Ltd prior to its listing in 2007 and subsequent sale to Vedanta Resources Plc.
Cairn Energy said it is pursuing restitution of $1.3 billion losses from the Indian government on account of the regulatory action.
After the share sale, Cairn will write down the carrying value of its investment in Vedanta Ltd, resulting in an impairment charge.
Cairn’s demand for compensation for the regulatory action is now part of an international arbitration.
Final hearings are scheduled for two weeks from August 20 in The Hague, said the company.
So far, the tax department has seized dividends due to Cairn from its shareholding in Vedanta totalling about $155 million, and has offset a tax rebate of $234 million due to Cairn from overpayment of capital gains tax on a separate matter, the company said.
The tax department claims a principal tax due of about ₹10,200 crore plus interest and penalties.
The company claims the arbitration will result in a binding and internationally enforceable award.
“The group has legal advice confirming that the maximum amount that could ultimately be recovered from Cairn by the Indian income tax department is limited to the value of Cairn UK Holdings Ltd’s assets, principally the ordinary and preference shares in Vedanta Ltd plus the seized dividends and tax refund from 2011,” said the company in an update issued on the tax dispute. MUMBAI: The Bombay high court will hear on July 31 a plea filed by Godrej and Boyce Manufacturing Co. Ltd against National Highspeed Rail Corp. (NHSRCL) and the state and Union governments, seeking the court’s intervention to ensure that an alternate route is chosen for the bullet train project.
One of the entry points to the underground tunnel of the project falls on prime property in Vikhroli, a central suburb of Mumbai, which belongs to the century-old maker of white goods and locks.
The company has thus moved against the government authorities under the relatively new law of Right to Fair Compensation & Transparency in Land Acquisition, Rehabilitation & Resettlement Act, 2013, against the proposed acquisition.
The company, one of the country’s largest privately-held corporations, contends that the government should consider an alternative for the proposed tunnel. The conglomerate has sought a direction to authorities concerned to change the project’s alignment so that it can get nearly 8.6 acres of land belonging to its infrastructure arm Godrej Construction out of the project’s map, according to a report.
“According to the current alignment of the bullet train project, of the total 508.17 km of rail track between Mumbai and Ahmedabad, about 21 km is planned to be underground. One of the entry points to the underground tunnel falls on the land in Vikhroli, land belongs to Godrej,” said the person quoted above.
Email queries to Godrej & Boyce remained unanswered till the time of filing the report, while NHSRCL spokesman Dhananjay Kumar refused to divulge details as the matter is subjudice.
PTI
PTI contributed to this story.