The retrospective amendments made to taxation laws in 2012 had enabled the Indian Government to tax gains since the implementation of the Income Tax Act, 1961. Including offshore transactions of assets of substantial value in India by foreign conglomerates. This was done to incapacitate companies like Vodafone and Cairn, among others, to elude tax dues in India. This paper elucidates the recent case of Cairn Energy against the Government of India under this backdrop. Initially, it explains the reasons that led to the implementation of retrospective tax with reference to the Vodafone Tax Dispute (2012). Further, it sheds light on the circumstances that led the Government to pass a new amendment (2021) in the Income Tax act, 1961-nullifying the retrospective aspect of the legislation for transactions prior to 2012 and its effect on the current economic environment.
