MOSCOW, May 4 – RAPSI, Dmitry Shchitov. The Arkhangelsk Regional Commercial Court has ended proceedings in a lawsuit filed by Total E&P Russia (Total’s subsidiary in Russia) against the Russian tax authorities for the reimbursement of 1.63 billion rubles.

The plaintiff notified the court that it is withdrawing its claims in light of an out of court settlement with the defendant, a court representative said.

Total E&P Russia had filed the lawsuit against tax authorities for the refund of VAT in the amount of 1.4 billion rubles for the period between July 2007 and the second quarter of 2009.

Total E&P Russia had also asked the court to order the defendant to pay the plaintiff a total of 235.38 million rubles in interest for exceeding the VAT refund deadline.

In January, the Supreme Commercial Court decided that the tax authorities must refund Total E&P Russia over 335 million rubles in VAT.

The lower courts found that Total E&P Russia’s oil production at the Kharyaga Field in the Nenets Autonomous Area was governed by a production sharing agreement signed by Total E&P Russia, the Russian government, and the Nenets Autonomous Area government in December 1995.

Under the agreement, Total E&P Russia, as an investor, is VAT exempt in Russia. However, when purchasing goods and services from Russian counterparts, the company paid the VAT included in their invoices. Total E&P Russia claims that the VAT must be refunded to it in accordance with its VAT exempt status under the production sharing agreement.