Govt wants to adjust Rs 4,500 cr worth shares of Cairn India against tax payment

Cairn India required to make an up-front payment of 50% of tax demand that would be a little over Rs 10,000 cr

The Delhi High Court on Thursday gave Cairn India time till April 22 to decide on the manner in which the company would make upfront payment for the Rs 20,494-crore tax demand it faces. During the hearing on Thursday, the government proposed that shares of the company worth Rs 4,200 crore, frozen as part of the January tax demand, form a part of the upfront payment.

It said Cairn India was required to make an upfront payment of 50 per cent of the tax demand — a little over Rs 10,000 crore. The remaining Rs 6,000 crore would need to be paid in two forms — Rs 3,000 crore as cash payment and another Rs 3,000 crore as bank guarantee. The company sought time to decide on the proposal, which was granted to the company. Cairn India had filed a petition in the Delhi High Court on April 6 against the government's tax demand.

The Anil Aggarwal-owned Vedanta group company has sought quashing of the order and a direction to the tax authorities to not take “any coercive steps for recovery of demand” from the company.

During the course of arguments, the company's counsel argued that the tax proceedings were initiated after a lapse of more than six years from the end of 2006-07 and, therefore, should be quashed.