New Delhi: British oil explorer Cairn Energy plc on Tuesday said the final hearing in the arbitration, which it has initiated against a Rs 10,247-crore retrospective tax demand raised by India, will begin in August.

In an operational update, Cairn said the three-member international arbitration tribunal has indicated that it will expeditiously draft the award after the hearing.

Cairn has taken the arbitration route against the Indian government, which used a new law giving it powers to impose taxes retrospectively for slapping a Rs 10,247 crore demand on a decade-old internal reorganisation of the company's unit in the country.

"International arbitration proceedings are well advanced with the final hearing of Cairn's claim under the UK-India Bilateral Investment Treaty scheduled for August 2018," Cairn said.

The tribunal was earlier expected to begin final hearing sometime in early 2018 after responses and counter-responses are filed by Cairn and the Government of India. But the proceedings were pushed back to August.

"The tribunal has stated that it will make appropriate arrangements to progress with the drafting of the award as expeditiously as possible after the final hearing," Cairn said.

Cairn's direct subsidiary, Cairn UK Holdings Ltd (CUHL), had in 2016 received an assessment order from the income tax department relating to the intra-group restructuring undertaken in 2006 prior to the IPO of Cairn India Ltd (CIL) in India.

The order cited a retrospective amendment to tax law introduced in 2012. Cairn contested the tax.

The assessment order raised tax demand of Rs 10,247 crore. An interest of Rs 18,800 crore was originally charged from 2007, but this was quashed by the Income Tax Appellate Tribunal in late 2016.

Following that, the income tax department issued a revised demand including interest running from February 2016, that is 30 days after the date of the assessment order. PTI