New Delhi, June 19: The income tax department has ordered coercive action against Cairn Energy of the UK, including taking away over Rs 2,000 crore in dividend and tax refund, to recover part of the Rs 10,247 crore retrospective tax.

This follows the British oil company losing in an international arbitration tribunal its challenge against India's I-T department taking coercive action to recover the tax dues.

Cairn Energy today said the tax authorities had directed Vedanta to pay to the government the $104 million (Rs 650 crore) in dividend that was due to the Edinburgh-based company.

Officials said the tax department had already adjusted Rs 1,500 crore of tax refund that was due to Cairn Energy Plc, against the principal amount.

On June 16, it sent a notice under section 226(3) of the income tax act to the company's erstwhile subsidiary, Cairn India Ltd (now Vedanta India Ltd), saying whatever is due to the British firm in the form of dividend should be transferred to the government.

As much as $104 million, or about Rs 650 crore, in past and current dividend, is due to the company, officials said, adding that it is likely to be transferred to the exchequer today or by tomorrow.

Next, the department will move to take a 9.8 per cent residual stake that Cairn Energy retains in Cairn India even after selling the erstwhile subsidiary to Vedanta. The officials said the tribunal refused to entertain Cairn Energy's pleas to restrain the tax department from taking any coercive action and ordering Cairn India to release dividend due to Cairn Energy.

Deadline over

The income tax department had on March 31 issued a notice to Cairn Energy seeking tax of Rs 10,247 crore and set June 15 as the deadline for payment.

This notice followed Cairn Energy losing an appeal in Indian tax tribunal ITAT against the levy. Cairn Energy said it would continue with the international arbitration proceedings against the retrospective tax demand.