New Delhi : British oil firm Cairn Energy plc has accused a senior finance ministry official of “privately” advising billionaire Anil Agarwal-led Vedanta Group to withhold its dividend income for a potential squaring off of a retrospective tax liability.
Cairn Energy, which is the only company whose assets have been frozen for a retrospective tax demand, has in a written application to an international arbitration tribunal stated that its dividend income from its erstwhile subsidiary Cairn India (now a Vedanta Group firm) has not been paid for last three financial year, reports PTI.
This, it alleged, was done at the behest of an “advise” a senior finance ministry official gave to Vedanta in “private meetings”, multiple sources in the tax department and industry said. It has also written to SEBI on the issue. The income tax department had in January 2014 draft assessment estimated Rs 10,247 crore tax due on Cairn Energy for capital gains it allegedly made on a 2006 transfer of India assets to a newly created subsidiary Cairn India and then listing it on stock exchanges.
Cairn Energy sold majority stake in Cairn India to Vedanta Group in 2011 but retained 9.8 per cent stake which the tax department had barred it from selling. After sending draft assessment order, the tax department had in April 2014 also raised a similar tax demand on Cairn India for not withholding tax in 2006. Both Cairn Energy and Cairn India have initiated separate international arbitrations contesting the tax demands.
