“Tiger Global did not demonstrate that Mauritius failed as a treaty platform”

By Kamal Hawabhay 

Specialist in international business structuring through the Mauritius IFC and international jurisdictions | Expert in Mauritius Taxation | Founder & MD of GWMS Ltd

Introduction

The case, commonly referred to as the Tiger Global case, involves two Mauritius investment holding Global Business Companies (GBCs) who were respondents before the Indian Supreme Court (SC), in the Tiger Global structure, namely, Tiger Global International II Holdings & Tiger Global International IV Holdings. 

Both held valid Tax Residence Certificates (TRCs) issued by the Mauritius authorities.

Before the matter reached the SC, the Authority for Advance Rulings (AAR) had held that the gains realised by the GBCs on their exit from Flipkart Private Limited (Flipkart), a Singaporean company, were taxable in India on the basis that the structure amounted to treaty abuse and that the real control and decision-making were exercised outside Mauritius. 

The Delhi High Court (HC) subsequently set aside the AAR ruling in writ proceedings, holding that there was no treaty abuse, that valid TRCs entitled the entities to treaty protection, and that substance existed in Mauritius. The Indian Income Tax Department (Revenue) appealed this decision to the SC, leading to the judgment under discussion.

The SC decision, issued on 15 January 2026 concerns the taxation of gains arising from the exit of U.S. private equity investors (via the GBCs) from Flipkart, which held one of India’s leading e-commerce platforms. This exit was assessed to result in an indirect transfer situation as the GBCs sold their shares in a Singapore holding company whose underlying assets were Indian. 

The case has been widely discussed in Indian media because of its financial stakes — some reports in the Indian press estimate a tax exposure in India at over USD1.6 billion, exceeding the economic gains realised on exit. Their perception, inconsistent with the judgement to some extent, is that the SC found that the Mauritius entities were conduits and lacked substance in Mauritius. 

However, as I explain below, the SC, in fact, was not legally entitled to carry out a full fact re-appraisal but proceeded to do a legal analysis of case facts including US influence and perceived lack of substance, leading to denial of treaty benefits. Since the SC accepted the AAR’s prima facie avoidance conclusion and could not re-examine the facts, the rest of its analysis followed the same track.

The Indian Press Narrative — and why it is somewhat misleading

On pages 11 to 28 of the judgement, the SC merely stated that “it would be appropriate to outline the findings of the AAR and the High Court…”. It further noted that while the AAR observed that the transaction appeared prima facie to involve tax avoidance, it expressly refrained from rendering any final determination. The SC also noted that the HC proceeded to adjudicate the issue on merits, which it considered to be impermissible.

The SC having considered that the HC exceeded its mandate, could not assess any of HC’s counter arguments against AAR’s contentions and did not do any of these: examine Place of Effective Management (POEM), evaluate commercial substance, assess beneficial ownership, classify the entities as conduits, challenge the validity of the TRCs, or determine whether the entities were residents of Mauritius under Article 4. 

However, the SC’s sequencing of domestic tax law over treaty relief raises important questions for treaty certainty, BEPS coherence and IFC competitiveness.

In the days following the ruling, several Indian media outlets reported that the SC had found that the “head and brain” of the structure was in the United States, concluded that the Mauritius entities lacked independent decision-making power, labelled them conduits, and held that treaty abuse was established. The fact is that the learned judge simply re-affirmed the Revenue’s submissions about “head and brain’” and the other points by the concerned parties, without a factual assessment. 

The media attributed these directly to the SC, which is only partially accurate.

The HC’s ruling in essence

Treaty abuse and aggressive tax planning were the submissions of the Revenue which were upheld by the AAR. The HC went to great lengths to counter these submissions by analysing the facts of the case in detail. 

For example, the Revenue contended, and the AAR accepted, that material transactions required sign-off from a U.S.-based senior officer in the Tiger Global structure, who exercised de facto control through a non-resident director. On this basis, the AAR concluded that the effective “head and brain” of the entities was located outside Mauritius and that treaty benefits could be denied on anti-abuse grounds.

The HC, on the other hand, countered the contention by noting that although the U.S.-based senior officer had the authority to approve material transactions, such authority was conferred by a collective decision of the Mauritius Board and required countersignature by the Mauritian-based Directors. This is an acceptable modus operandi which demonstrates that the local Board was fully involved in material decision making.

Many such instances were explained by the HC to demonstrate that POEM and substance were indeed in Mauritius.

The SC disregarded, albeit in full compliance with procedural requirements under Indian law, the HC’s extensive analysis, including its conclusions on residence, substance and treaty entitlement, and overturned the ruling on procedural grounds. In effect, the SC examined if the structure defeats treaty purpose (abuse via shell entities) and after endorsing AAR’s contention, applied domestic law.

The methodology of the SC

 To understand the SC’s approach, one must trace the procedural path:

1. Revenue contended there was treaty abuse, concluding that control was exercised from outside Mauritius.
2. AAR concurred with Revenue.
3. HC overturned the AAR, finding no treaty abuse and affirming substance in Mauritius.
4. SC discarded the HC s ruling. The SC held that the HC, acting through writ jurisdiction, could not re-weigh evidence or substitute its own factual findings.

On page 132 of the judgement, the SC concluded that “The Revenue has proved that the transactions in the instant case are impermissible tax-avoidance arrangements, and the evidence prima facie establishes that they do not qualify as lawful.”

By discarding, on a legal procedural basis, the ruling of the HC which found there was no treaty abuse and there was substance in Mauritius, the SC, in essence restored the findings of the Revenue. In its ‘Discussion and Findings’ (pages 104-132), the SC affirmed the Revenue’s prima facie case on avoidance via GAAR, without re-testing facts but by applying legal principles to certain elements (e.g., US control, Mauritius operations).

As per my limited research (which may be challenged), it appears that had the HC framed its intervention on grounds it was entitled to review — such as misapplication of treaty law, non-consideration of relevant legal principles, or breach of natural justice — rather than re-assessing facts, the SC would likely have been compelled to engage with the HC’s reasoning and address the treaty questions instead of disposing of the case on procedural jurisdiction.

Given the SC’s stance throughout its reasoning, which led to the above stated conclusion, it then examined the case from an Indian domestic law angle. The judgment also quoted CBDT Circular No. 1/2017, which states that GAAR can deny treaty benefits even though Section 90(2) of the Indian Income Tax allows taxpayers to apply the treaty where more beneficial. The learned judge added that GAAR is designed to counter aggressive tax planning and treaty-driven arrangements.

“Tiger Global demonstrates that the treaty was never thoroughly tested”

The Domestic Law vs Treaty Sequencing adopted by the SC

The SC privileged the existence of treaty abuse through aggressive tax planning structures and accepted the domestic indirect transfer taxation under Section 9 of the Indian Income Tax Act to establish India’s taxing rights upfront. Treaty relief was treated as secondary and not the primary instrument.

Under BEPS Action 6 and OECD/UN Model Commentary, the standard ordering is:
1. determine taxing rights under treaty
2. apply treaty anti-abuse tools (Principal Purpose Test (PPT)/Limitation of Benefits (LOB)
3. if treaty benefit denied → apply domestic law

In Tiger Global, the sequence was inverted.

The SC applied GAAR as a domestic threshold override (citing CBDT Circular 1/2017), implicitly scrutinizing abuse through LOB-like tests (e.g. substance, beneficial ownership, control) and treaty purpose before denying benefits. 

Treaty interpretation occurred (e.g., Articles 4 on residency and 13 on capital gains/grandfathering) but was subordinated to GAAR’s anti-avoidance framework. 

Grandfathering under the 2016 Protocol was disallowed once the SC classified the structure as an impermissible ‘arrangement’, ruling that domestic anti-abuse law (GAAR) overrides treaty protections.

Another key issue is whether the domestic indirect transfer provisions under Section 9 of the Indian Income Tax Act should have operated before treaty allocation and treaty anti-abuse tests were applied. The SC ruled that domestic indirect transfer provisions operate as the default taxing right once the ‘arrangement’ is disqualified from treaty protection.

TRC and Treaty Residence Recognition 

Historically, a Mauritius TRC carried strong weight in India due to CBDT Circular 789 (2000) and Azadi Bachao Andolan (2003). While the TRCs were validly issued, the SC ruled they are no longer conclusive proof of residency or beneficial ownership. The SC downgraded the TRC to a ‘ticket to enter’ the treaty, clarifying it is not a shield against GAAR investigations into commercial substance.

Grandfathering Under the 2016 Protocol

The 2016 India–Mauritius Protocol granted grandfathering protection for gains on shares acquired before 1 April 2017. Tiger Global involved such shares.

However, because of the SC’s procedural posture, distinction between investments and arrangements and opinion that the Revenue has proven that the Tiger Global transaction constituted an “arrangement impermissible under law,” the learned judge opined that “the assessees are not entitled to claim exemption under Article 13(4) of the DTAA.”

A point to note is that while the treaty only refers to ‘alienation of shares,” which under Article 13 (4) should benefit from grandfathering, the distinction between investment and arrangement arising from domestic law was given priority to justify the denial of grandfathering.

Implications for Mauritius IFC

For Mauritius, Tiger Global triggers three important reflections:

(i) Treaty Certainty Matters More Than Ever

Private equity, sovereign funds, and DFIs value exit certainty as much as or perhaps even more than entry incentives. Mauritius continues to offer treaty-based allocation of taxing rights, grandfathering protections, judicial independence, no domestic GAAR override over treaties and recognisable substance pathways.

(ii) Substance Alignment with BEPS

Mauritius already enforces BEPS-aligned substance via board governance, minimum expenditure, AML/CFT standards, Core Income Generating Activities and management and control.

(iii) Certainty vs Sovereignty Trade-Off

The legitimate policy worry that India has about treaty abuse, which the 2 members Divisional bench of the SC emphasized, is valid. However, the Tiger Global case appears to suggest that Indian domestic tax sovereignty should prevail over treaty certainty in case of conflict or perceived uncertainty. Mauritius positions itself on the opposite end: treaty certainty prevails unless treaty abuse is proven. 

The ruling however reinforces substance requirements, aligning with Mauritius’s BEPS-aligned reforms.

The Indian AAR, BAAR & the Mauritius RT

In India, the Board for Advance Rulings (BAAR) replaced AAR in 2021, shifting India’s advance ruling mechanism from an independent quasi-judicial body to a revenue-administered one.

In effect, the current environment under which GIFT City operates include the following: Indian domestic law laws, certain laws are customized to GIFT City only, GAAR/PPT application is controlled by domestic authorities in case of perceived tax abuse, indirect transfer rules, domestic penalty regimes and in case of conflict, it is pertinent to note that BAAR has no appellate fact review, similarly to the AAR.

GIFT investors must contend with BAAR decisions which can only be challenged by writ, and as Tiger Global shows, writ review cannot re-evaluate facts.

Mauritius, in contrast, offers treaty adjudication, and treaty prevails over domestic law and bilateral dispute resolution (including MAP).

Mauritius has also introduced a new Revenue Tribunal (RT), effective 5 January 2026, replacing the Assessment Review Committee (ARC) under the Revenue Tribunal Act 2025. The RT provides a more independent and efficient tax dispute resolution mechanism, with expanded powers and broader appeal rights up to the Supreme Court and ultimately the Privy Council, both of which exercise a wider appellate scope.

Is This the End of the Road? Review, Curative and MAP Options

I am no expert in Indian legal process but my findings, assisted by AI based research, suggests the following:

Because this is a SC decision, there is no appeal in the ordinary sense. By contrast, in Mauritius, the ultimate resort is to appeal to the Privy Council of the United Kingdom.

However, Tiger Global may consider: (a) Review Petition – Available where there is error of law, failure to apply treaty interpretation rules, oversight of material issues, or manifest injustice, or (b) Curative Petition – An exceptional remedy if review fails. (c) Mutual Agreement Procedure (MAP) – A diplomatic treaty mechanism under Article 25 that can mitigate double taxation. 

I invite any expert on Indian law to clarify or confirm (a) & (b).

Final Reflections

In essence, Revenue contends treaty abuse. AAR agrees. HC disagrees. SC overturns HC on writ jurisdiction. Treaty abuse resurfaces. In writ proceedings, neither HC nor SC can re-appreciate facts, so AAR’s findings stand. The SC therefore conducts only legal analysis against the backdrop of treaty abuse and agrees with Revenue. GAAR and domestic law apply. Tiger Global loses.

Tiger Global marks an inflection point in India’s cross-border tax policy. The decision reflects a move away from the treaty-first paradigm of Azadi Bachao Andolan toward a domestic-first anti-abuse sovereignty model, where perceived abuse justifies the assertion of domestic tax powers. 

The SC’s emphasis on tax sovereignty (Pardiwala J.’s annex, pages 1-19) validates India’s anti-abuse concerns, though it also raises questions on treaty certainty for genuine investors. For investors and IFCs, the lesson is clear: exit certainty is now a differentiator. 

Tiger Global did not demonstrate that Mauritius failed as a treaty platform. It demonstrates that the treaty was never thoroughly tested. Where treaty residence, treaty allocation and treaty anti-abuse questions are adjudicated on their merits, Mauritius has more often than not prevailed, precisely because treaties operate within their own framework. 

Mauritius therefore remains relevant because treaty certainty still matters, and where no abuse can be asserted, treaty rights hold.

Note: This article offers general commentary and does not constitute tax or legal advice.