InvestorQ : Is Indian government justified in saying that it will appeal against the international court order to pay $1.2 billion?
ishika Banerjee made post

Is Indian government justified in saying that it will appeal against the international court order to pay $1.2 billion?

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4 weeks ago
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Even as Cairn tries to build pressure on India by threatening attachment of assets, the Indian government is not too perturbed. You really cannot question the finance minister’s contention that taxation is the sovereign right of the government. Then there is the form vs substance argument, which clearly shows that the Cairn transaction was structured to beat around the tax system.

India is of the view that the Indo-UK treaty was signed to encourage FDI into India not to give corporate investors tax breaks. Irrespective of what Cairn may say, eventually when the transaction veil is lifted, it becomes all too clear that it was an attempt to use the lacunae in the Indian lax laws at that point of time to earn tax-free gains. If India takes on Cairn on that point, it is going to be hard for Cairn to justify its stand.

However, neither India nor Cairn PLC have closed diplomatic channels and both are pursuing diplomatic alternatives at the level of bureaucrats and ministers. Cairn has got a largesse and they need to own up. Indian government could have done something better than retrospective taxation. Resolving it amicably will be good for India, UK and for Cairn.

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