CNBC-TV18 | Mar 30, 2015
CBDT on Cairn: Tax matters not covered under UK-India BIT
According to sources in the Central Board of Direct Taxes (CBDT), tax matters are not covered under UK-India bilateral Investment treaty (BIT).
Sapna Das Reporter, CNBC-TV18
After Cairn Energy of UK, London- listed Vedanta Group has slapped a notice of claims against the Indian government challenging the Rs 20,497-crore tax imposed on its subsidiary using retrospective legislation.
Billionaire Anil Agarwal-led group said it will take "all necessary steps" to protect interest against the tax notice on Cairn India.
However, according to sources in the Central Board of Direct Taxes (CBDT), tax matters are not covered under UK-India bilateral Investment treaty (BIT).
The ministry says transactions have occurred under Section 9 of the IT Act, which states whatever is under retrospective provisions do apply to transactions and secondly, since the law is still there, the government does not have too much of discretion on this front, so intervention is not possible and law will take its own course.
Therefore, it now seems that a long battle will ensue between the two just the way Vodafone case preceded.
However, Vendanta on Friday had made it clear that they are taking the first step against arbitration.