CAIRN Energy's former subsidiary in India is reported to have launched a legal action against the country's government as both firms dispute tax claims, writes Mark Williamson.
The Cairn India business now owned by Vedanta has filed a writ seeking set aside of a $3.3 billion (£2.2bn) tax demand from Indian authorities related to its listing in 2007, the Reuters agency reported.
The demand relates to an alleged failure to deduct withholding tax on capital gains made by Edinburgh-based Cairn Energy, during a reorganisation ahead of Cairn India's 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. The company says it has paid all taxes due.
Cairn Energy has a 10 per cent stake in Cairn India.
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