Government of India has taken the first step to withdrawn the retrospective tax demands imposed on Vedanta, the mining group said in a statement.
Vedanta’s former subsidiary and oil producer Cairn Energy was hit with a retrospective tax bill of Rs 10,247 cr in January 2014, or Rs 20,495 cr including penalties and interest.
Cairn Energy subsequently got a favorable ruling in an international arbitration against the Indian government’s move to impose tax on a transaction that took place at a time when no such tax was in existence.
After facing multiple rulings against such moves in international courts and arbitration fora, the government of India finally decided to roll back the provision, and withdraw such notices, earlier this year.
However, one of the conditions for the same was that these companies need to withdraw their petitions and proceedings in front of all panels around the world.
Vedanta said the government has taken the first step to withdrawing the tax demands by accepting its filings, and therefore, Vedanta has also decided to withdraw its appeals and cases.
“Vedanta Ltd., along with its related group entities, have filed the required statutory forms and undertakings in the prescribed Form 1 under the Indian Income Tax Rules, 1962. The aforesaid forms and undertakings have been accepted by the jurisdictional commissioner, and accordingly, a certificate to this effect, as prescribed in Form No. 2 under Rule 11UF of the Indian Income Tax Rules, 1962 has been issued,” it said.
As such, said Vedanta, it has decided to withdraw its arbitration proceedings instituted at Permanent Court for Arbitration in the International Court of Justice.
Vedanta has also moved to withdraw income tax appeals pending before Income Tax Appellate Tribunal filed in 2017, as well as the writ petition filed before the Delhi High Court in 2015 in this matter.
“Vedanta Ltd. and its related group entities also declare that no further proceedings or claims shall be initiated in any court or tribunal whether in India or outside India, pursuant to fulfillment of conditions as prescribed in Rule 11UF of the Indian Income Tax Rules,” it added.
The retrospective tax, introduced by then finance minister Pranab Mukherjee nine years ago, has been among the most controversial and criticizes laws to be passed by the Indian Parliament, and was widely considered against natural justice.
As part of the arbitration and litigation in this regard, a French court allowed Cairn Energy to seize around 20 government of India properties in Paris to recover a part of the $1.7 billion awarded by an arbitration panel that found fault with the government’s retrospective tax.
Finding it more trouble than worth, Government of India soon decided, therefore, to withdraw the tax provision.