India is in the process of filing an appeal against international arbitration award in the Cairn's retrospective tax case, sources close to the development said. However, the sources said that government is not averse to going for a settlement of the tax disputes within the existing legal framework.
According to sources, the government believes that Cairn had set up a tax-abusive structure and did not pay taxes anywhere in the world on the gains that it made in India. In the said case, said sources, it was well within India's sovereign powers to redress the situation of double non-taxation and tax abuse.
The government is also confident that if enforcement proceedings are initiated, India will strongly defend its interests.
Cairn is talking to the government and is yet to respond on the discussions.