India Takes Cautious Approach in Tiger Global Tax Case Revival
The Indian government has decided to revive tax assessment proceedings against three Mauritius-based entities of Tiger Global Management LLC. This move comes after a favorable Supreme Court decision regarding the 2018 stake sale in Flipkart. However, officials emphasize they will proceed with extreme caution throughout the process.
Respecting Legal Rights and Procedures
Government officials familiar with the matter confirm that tax authorities will respect Tiger Global's right to appeal. If the company files an appeal against the Supreme Court's decision, the resumed tax proceedings will automatically stay until the judicial process concludes. This approach demonstrates the administration's commitment to following proper legal channels.
"Litigation cannot be wished away," said one official who requested anonymity. "The right to appeal is a statutory right available to taxpayers. The Income Tax Department respects this right and therefore has to await the final outcome of the judicial process."
The Core of the Tax Dispute
At the heart of this complex case lies Tiger Global's 2018 sale of a controlling stake in Flipkart to Walmart Inc. for $16 billion. The three Mauritius entities involved received aggregate consideration exceeding ₹14,500 crore, resulting in significant capital gains. Indian tax authorities seek to tax these gains under revised treaty provisions.
The dispute centers on the interpretation of the India-Mauritius Double Tax Avoidance Agreement. India amended this treaty effective April 1, 2017, giving itself the right to tax such transactions while grandfathering earlier investments. Tiger Global had argued their sale wasn't taxable under previous treaty provisions.
Assessment Proceedings to Resume
With the Supreme Court's judgment, assessment proceedings for the 2019-20 assessment year will now revive. The assessing officer will complete assessments following the court's ruling. A refund claim of approximately ₹967.52 crore, already withheld by authorities, will be addressed as part of assessment and demand proceedings.
Officials clarified that tax withholding wasn't a final determination of liability. "It was an interim measure taken in a situation where taxability itself was disputed," explained an official. "This could not be conclusively decided at the remittance stage."
Broader Implications and Expert Views
Tax experts have raised concerns that this Supreme Court decision might prompt the tax department to examine similar transactions by other companies. However, the government appears determined to maintain a balanced approach that respects both legal processes and investor concerns.
Amit Maheshwari, managing partner at AKM Global, noted that Tiger Global's immediate remedy seems limited to filing a review petition before the Supreme Court. "Given that this ruling concerns India's sovereign taxing powers and involves interpretation of domestic tax law and the India-Mauritius treaty, the scope for any international arbitration also seems extremely limited," he observed.
The government's careful approach reflects its broader goal of creating a more competitive and efficient economy with improved business climate. Officials stress that not all tax disputes represent overreach, with many arising from genuine differences in interpreting evolving areas of law.
This case continues to be closely watched as it represents important developments in India's efforts to address complex international tax matters while maintaining investor confidence during global economic challenges.
