The Modi government is likely to challenge the $1.4 billion arbitration award to Cairn Energy.

“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,” finance minister Nirmala Sitharaman told reporters on the Cairn Energy award.

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

“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 government’s stand of not raising any new tax demand using the 2012 legislation.

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

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, dividend confiscated and tax refund stopped to adjust a Rs 10,247 crore tax demand on Cairn.

The Centre has time till March 21 to challenge the award.

The statement comes days after her ministry officials held three rounds of talks with Cairn executives, including CEO Simon Thomson to find a solution.

The statement indicates that the possibility of an alternative solution to the issue that had seemed as a possibility has fizzled out.