"We feel interest is due and is liable to be paid. We plan to soon approach the high court seeking quashing of the ITAT order," a senior income tax department official told PTI.
Within weeks of tax tribunal ITAT upholding levy of retrospective tax, the Income Tax Department first sent a fresh demand note of Rs 10,247 crore and another show cause notice asking as to why penalty should not be levied for its failure in paying tax on time and filing of returns.
ITAT in its March 9 order held that Cairn Energy was liable to pay tax on the 2006 transfer of India assets to newly created Cairn India, prior to its listing. It, however, held that interest cannot be charged on it as the demand was raised using retrospective tax legislation.
Tax tribunal ITAT as upheld levy of Rs 10,247 crore capital gains tax on UK's Cairn Energy Plc but has held that interest cannot be charged on it as the demand was raised using retrospective tax legislation.
UK India Business Council (UKIBC) CEO Richard Heald said the residual issues of retrospective tax still impact external perceptions of India as an investment environment.
"Cairn Energy would like the Government of India to take the opportunity to repeal the legislation on retrospective taxation in the forthcoming budget.
The Direct Tax Dispute Resolution Scheme, announced by Finance Minister Arun Jaitley in the budget for 2016-17, seeks not just to settle disputes in retrospective taxes, but end nearly 2.6 lakh pending tax cases where Rs 5.16 lakh crore are locked in.
The government, in the Budget 2016-17, had announced a scheme to settle the retrospective tax disputes by waiving interest and penalty if the companies paid up the principal tax amount. The scheme opened on June 1 and is due to close on December 31.
Raising the multi-billion dollar Vodafone tax issue, the UK today asked for speeding up the arbitration process to resolve the dispute even as India assured that it will not resort to retrospective taxation route in such cases.
The government using retrospective tax legislation had in January 2014 issued a tax notice on Cairn Energy for alleged capital gains it made on a 10-year old internal reorganisation of its India unit.
Cairn has initiated an international arbitration seeking USD 5.6 billion in compensation from the Indian government in case the retrospective tax demand of Rs 29,047 crore is not quashed.
These fields, discovered by Oil and Natural Gas Corporation Ltd (ONGC) and Oil India LTD (OIL), are envisaged to be put on production through expeditious efforts.
It sought USD 1.05 billion in compensation for the loss of value its 9.8 per cent shareholding in its erstwhile subsidiary Cairn India suffered following Income Tax Department raising the tax demand in January 2014 and attaching the shares.
The three-member arbitration panel headed by Geneva-based arbitrator Laurent Levy held its first procedural hearing in Paris a few weeks back, sources privy to the development said.
The IT department has assured the UK-based explorer that the tax demand shall not be enforced till June 30.
Cairn India was in April 2014 slapped with a tax demand of Rs 20,495 crore for failing to deduct withholding tax on alleged capital gains made by its erstwhile parent company, Cairn Energy in 2006-07 when it reorganised India business.
Cairn, against whom the IT Department had on January 22, 2014 issued a draft assessment order of Rs 10,247 crore on alleged capital gains it made in a 2006 reorganisation of its India business, was last month issued a final assessment order.
CBDT Chairman Atulesh Jindal said "as long as" the retrospective amendment of the IT Act passed by Parliament remains valid, the "demand (of tax against them) remains valid."
EnQuest and Cairn Energy said on Monday they had acquired an additional 10.5 percent and 4.5 percent stake in the field, respectively.
The Vodafone retro tax case today came to the fore once again after the company today disclosed it had received a fresh notice seeking the amount that the government claims is due from the company.
British oil firm Cairn Energy plc today said it will seek from India over USD 600 million in damages for loss it suffered in value of its holding from a Rs 10,247-crore tax demand raised on its eight-year-old internal business recognition.
Cairn Energy chief executive Simon Thomson met Jaitley on Tuesday to seek a quick resolution to the two year old tax dispute that has forced the firm to sell assets, postpone investment and cut workforce. The company had challenged the tax assessment on a 2006 internal reorganisation and taken government to arbitration.
Ian Murray, Member of Parliament for Edinburgh South and Shadow Secretary of State for Scotland, wrote to Jaitley saying Cairn has lost jobs and suffered material financial loss as a direct result of action by the Government of India.
Addressing the officer trainees of the Indian Revenue Service, Jaitley said taxes which are realisable have to be collected, but the taxes that are not realisable, should not be collected.
The IT Department on January 22, 2014, issued a draft assessment order of Rs 10,247 crore on alleged capital gains it made in a 2006 reorganisation of its India business and last month issued a final assessment order.