While Cairn Energy termed the transaction as part of an internal reorganisation process, the Indian tax authorities claimed that it had resulted in capital gains for the British parent. The tax demand was slapped in 2015, provoking comparisons with the infamous Vodafone case, which also involved a retrospective levy. What is particularly unfortunate in the Cairn Energy case is that no out-of-court settlement seems to have been attempted. The PCA ruling, overturning the tax demand and ordering the Indian government to pay damages worth $1.2 billion plus interest dues to the UK-based form, came in December 2020. The same mechanism can well be used to settle, once and for all, not just with Cairn Energy, but all Vodafone-like cases.

Source: Indian Express May 17, 2021 21:56 UTC