Govt. said to likely file appeal against Cairn arbitration award

Option of appeal did not figure in Pandey’s talks with U.K. firm’s CEO, say sources

The Centre is likely to file an appeal against the $1.4 billion international arbitration award won by Cairn Energy in a tax dispute, even as the issue did not figure during two-days of talks the Finance Secretary held with the company officials to look for a resolution, sources with knowledge of the matter said.

Soon after the second meeting in as many days between Cairn CEO Simon Thomson and Finance Secretary Ajay Bhushan Pandey ended, a person informed of the development said the government intends to defend its sovereign right in taxation and will file an appeal against an international tribunal ordering India to return $1.4 billion to the British firm.

Cairn remained tight-lipped on the parleys it has initiated with an aim to avert having to take legal recourse to recover the amount including through seizure of Indian assets overseas.

“Constructive dialogue is continuing,” Mr. Thomson said after the meeting on Friday. He did not elaborate.

Cairn has indicated it could seize overseas assets such as aircraft and ships if New Delhi fails to comply with the arbitration award and return the value of the shares sold, dividend seized and tax refund withheld by the income tax department to recover part of the tax demand it had raised using retrospective legislation.

The first person said the government, however, has kept open the possibility of a resolution within Indian laws. The options include Cairn opting for the Vivad se Vishwas scheme, which gives relief on interest and penalty if the principal tax demand is paid.

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