Billionaire Anil Agarwal’s mining group Vedanta on Monday said it has withdrawn cases in the Delhi high court as well as before an international arbitration tribunal to settle a Rs 20,495 crore retrospective tax dispute with the government.
After slapping a Rs 10,247- crore tax demand on UK’s Cairn Energy Plc for alleged capital gains made on a 2006 internal reorganisation prior to the listing of its India business, the Income Tax Department had sought Rs 20,495 crore in taxes (including penalty) from Cairn India for failing to deduct tax on capital gains made by its British parent.
Cairn India was in 2011 bought by Agarwal’s group and subsequently, the firm was merged with Vedanta Ltd.
In a statement, Vedanta said it has used the recently enacted law that scraps all demands levied using a 2012 retrospective tax legislation, to settle the dispute.
As conditions for the same, it has withdrawn all legal challenges against the government and given an undertaking to forego all future rights pertaining to the tax demand.
Cairn Energy, which has maintained that no tax under the prevalent regime was due on the 2006 reorganisation and won an international arbitration against the 2015 order seeking back taxes, is parallelly settling its dispute with the government. It is withdrawing cases to get a Rs 7,900 crore of refund of taxes collected from it using the retrospective tax law.
Vedanta had challenged the demand for taxes at two forums — the Income Tax Appellate Tribunal and Delhi High Court, while its parent Vedanta Resources challenged the move before a Singapore arbitration tribunal.
While the Delhi high court continues to hear the matter, the arbitration tribunal had completed the hearing and is due to pass an order anytime now.
“In view of the recent amendments to the Indian Income Tax Act, which nullifies the retrospective tax imposed by Finance Act, 2012, Vedanta and all its related group entities have taken steps to settle disputes arising from Order dated March 11, 2015, passed by the Deputy Commissioner of Income-tax, International Taxation, Circle-Gurgaon,” the firm said in a statement.
