NEW DELHI: Cairn India Ltd, India’s largest private-sector oil producer, said on Monday it had moved the Delhi High Court against a $3.3 billion tax demand from Indian authorities related to its listing in 2007.
The company, a unit of London-listed Vedanta Resources Plc, said it had filed a writ petition seeking “quashing/setting aside” of the order passed by the tax authorities.
Cairn sought directions to the tax authorities not to take any coercive steps against it for recovery of the demand.
Cairn India received last month the demand of about 204 billion rupees from Indian tax authorities for an alleged failure to deduct withholding tax on capital gains made by its former parent, Cairn Energy Plc, during a reorganisation ahead of its market listing.
Vedanta said last month it would file a notice of claim against the Indian government under the UK-India bilateral investment treaty.
Cairn Energy, which received a tax demand of more than $1.6 billion related to the same case, has also filed a notice of dispute under the bilateral investment treaty.
Cairn India shares had gained 0.3 per cent in morning trade on Tuesday in a broader market that was up about 0.2 per cent.
The tax notice came after Cairn Energy, the Indian company’s former promoter, was slapped with a Rs 10,247 crore tax demand for an alleged Rs 24,500 crore worth of capital gains it made in 2006 while transferring all its India assets to a new company, Cairn India, and getting it listed on the stock exchanges.
In a recent regulatory filing, Cairn India had said the demand comprised of Rs 10,248 crore in tax and the remainder Rs 10,247 crore in interest payout.
Cairn India had also said that the demand notice was sent to it “for an alleged failure to deduct withholding tax on alleged capital gains arising during 2006-07 in the hands of Cairn UK Holdings Limited (CUHL)”, its parent company which is a subsidiary of Cairn Energy Plc.
This, it said, was in respect of the transaction of CUHL transferring the shares of Cairn India Holdings Ltd (CIHL) to Cairn India Limited as part of internal group reorganisation in 2006-07 to facilitate the initial public offer (IPO) of Cairn India Ltd.
Cairn India said it “cannot be penalised by expecting that it ought to have withheld tax”.
“There was no taxable gains and accordingly, no liability to withhold tax on date of payment. Further, there cannot be any liability to withhold tax on consideration discharged by way of share swap,” it said.
