Cairn India and Air India had jointly urged the court to stop the process in the matter.
A New York court has issued a stay order on Cairn Energy’s lawsuit. The court said that he should first talk to the Government of India on this matter. For this, an order has been issued to stay the matter till November 18.
Cairn Tax dispute: A New York court has put on hold Cairn India’s suit to gain control of Air India’s assets in the US for the time being. The Arbitration Tribunal ruled in favor of Cairn against the Government of India. Under this decision, the British company Cairn had to recover $ 1.2 billion from the government. A New York court has put the matter on hold for the time being to give Cairn time to settle a long-standing dispute with the Indian government.
According to documents available with PTI, the New York district court adjourned the tax trial till November 18. Earlier, Cairn India and Air India had jointly urged the court to stop the process in the matter. The Government of India had abolished taxation from the previous date and implemented the new law. After which Cairn India made this request to the court. After the new law, the government will withdraw the tax demand of Rs 10,247 crore from Cairn. Sources with knowledge of the matter said that the finance ministry is preparing new rules under which retrospective tax demand against Cairn and 16 other companies will be withdrawn. These also include tax demand from UK company Vodafone Group.
Cairn to withdraw all cases against the government
Under these rules, companies will have to withdraw all cases against the government. In lieu of that, the government will return the money collected from them. Only then will the matter be settled. Companies will have to give assurance about this using a format. After that the money collected from them will be returned.
7900 crore to be returned to Cairn
Overall, the government has to return an amount of about Rs 8,100 crore. Of this, Rs 7,900 crore is to be returned to Cairn alone. The British company had won a case against the Indian government in an international arbitration regarding such a tax. The government refused to accept this arbitration decision and returned $1.2 billion in interest and fines. After that the company filed a lawsuit for control over the assets of Air India.
Company ready to take money without interest and penalty
Cairn has indicated that it will accept this amount if it is returned without interest and penalty. On September 13, Cairn and Air India jointly urged US District Judge Paul Gardafe to stop the matter. He said that this would give him time to assess the impact of the new law, which replaced the taxation law with retrospective effect. One of these lawsuits was filed against public sector Air India in May.
The company will withdraw the lawsuit after payment is made
After abolishing taxation from the retrospective date, the government will return the amount of Rs 8,100 crore raised from these companies. For this, companies will have to withdraw the cases against the government. Cairn Chief Executive Officer (CEO) Simon Thomson had earlier this month told PTI that these cases would be withdrawn once the payment of Rs 7,900 crore is received.
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