Tiger Global Before the Supreme Court: Redefining the Limits of Treaty Protection, AAR Jurisdiction, and Investor Certainty

Introduction: A Judgment That Will Outlive the Dispute

The Supreme Court’s decision in Authority for Advance Rulings v. Tiger Global International Holdings marks one of the most consequential moments in India’s international tax jurisprudence since Vodafone. While the immediate controversy arose from the denial of advance ruling relief to Tiger Global’s Mauritius entities, the judgment’s real significance lies elsewhere. It reshapes the doctrinal boundaries of the Authority for Advance Rulings (“AAR”), recalibrates the balance between treaty certainty and anti-avoidance enforcement, and signals a decisive judicial shift in how indirect transfers and legacy investment structures will be scrutinised going forward.

Importantly, the Court does not invalidate Mauritius structures, nor does it hold treaty shopping to be per se impermissible. Instead, the judgment is best understood as a jurisdictional and methodological ruling, one that expands the evaluative remit of the AAR and permits anti-avoidance reasoning to enter the analysis far earlier than taxpayers may have anticipated. This subtle but profound shift has immediate implications for private equity funds, long-term financial investors, and multinational groups navigating exits from India.

From Merits to Gatekeeping: The Central Question the Court Actually Decided

A critical starting point in reading the judgment is recognising what the Supreme Court was called upon to decide and what it was not. The appeal before the Court arose from a High Court judgment that had quashed the AAR’s refusal to entertain Tiger Global’s application under Section 245R of the Income-tax Act. The Supreme Court was therefore not determining final tax liability, nor conclusively applying GAAR. The Court’s task was narrower but more structurally important: whether the AAR was justified in refusing to exercise jurisdiction on the ground that the transaction was “prima facie designed for the avoidance of tax”.

By answering this question in the affirmative, the Court has repositioned the AAR from a largely facilitative certainty-granting body into a robust gatekeeper. The ruling clarifies that the AAR is not confined to a cursory or mechanical review of the stated transaction. Instead, it is entitled to examine the broader arrangement, including the manner of acquisition, the holding structure, control and decision-making dynamics, and the timing and nature of exit. This reading significantly widens the threshold inquiry and makes access to the AAR contingent upon surviving a substantive anti-avoidance lens at the very outset.

“Prima Facie” Reimagined: Lowering the Threshold, Raising the Stakes

One of the most consequential aspects of the judgment is the Court’s interpretation of the phrase “prima facie designed for the avoidance of tax” in the proviso to Section 245R(2). The Court rejects the notion that “prima facie” implies a tentative or superficial assessment. Instead, it endorses an evaluative standard that permits the AAR to weigh evidence, draw inferences from surrounding circumstances, and assess whether the arrangement, viewed holistically, bears the hallmarks of tax avoidance.

This interpretation fundamentally alters the risk calculus for taxpayers seeking advance rulings. Historically, the AAR was perceived as a forum where complex factual disputes could be deferred, and where taxpayers could obtain clarity on legal consequences without being subjected to a full-blown anti-avoidance trial. Post-Tiger Global, that assumption no longer holds. The AAR may now examine historical structuring choices, funding pathways, and control mechanisms, and reach adverse conclusions even before the merits of treaty entitlement are addressed. In effect, the gateway has narrowed, and the cost of mis-stepping has increased.

Indirect Transfers and the Limits of Grandfathering

The Supreme Court’s treatment of grandfathering under the India–Mauritius DTAA is another area of lasting impact. The High Court had held that Article 13(3A), which grandfathered gains arising from shares acquired prior to 1 April 2017, extended to the indirect transfer of a Singapore holding company whose value was substantially derived from Indian assets. The Supreme Court disagreed, drawing a sharp doctrinal distinction between direct transfers governed by Articles 13(3A) and 13(3B), and indirect transfers falling under Article 13(4).

By holding that grandfathering cannot be assumed to extend to indirect transfers unless expressly stated, the Court has introduced a formalistic bifurcation that weakens treaty protection for legacy structures. This reasoning, now binding, implies that even pre-2017 investments may be exposed to Indian tax where exits are structured through offshore holding companies, unless the treaty language clearly encompasses such scenarios. The decision thus narrows the practical utility of grandfathering provisions and highlights the importance of precise treaty drafting in an era of increasingly complex investment architectures.

GAAR Without GAAR: The Quiet Normalisation of Anti-Avoidance Logic

Perhaps the most analytically delicate aspect of the judgment is the Court’s use of GAAR principles without formally invoking GAAR. The Court repeatedly references the objectives, structure, and philosophy of Chapter X-A, and treats GAAR as an overarching articulation of India’s anti-avoidance policy. It accepts the proposition that GAAR concepts may inform treaty abuse analysis even where GAAR is not procedurally triggered.

This approach has far-reaching consequences. While the Court does not dispense with GAAR safeguards such as the approving panel or burden of proof at the assessment stage, it nonetheless legitimises the early introduction of GAAR-style reasoning at the AAR threshold. The distinction between “conceptual application” and “formal invocation” may appear subtle, but it effectively allows anti-avoidance doctrines to influence jurisdictional outcomes without the taxpayer being afforded the procedural protections embedded in GAAR. For investors, this focuses on the need to treat substance, control, and commercial rationale as front-loaded compliance considerations rather than issues to be addressed only in assessments.

The Tax Residency Certificate: From Shield to Starting Point

The judgment also recalibrates the evidentiary value of a Tax Residency Certificate (“TRC”). While reaffirming that a TRC creates a presumption of residence, the Court clarifies that such presumption is rebuttable where there is prima facie evidence of treaty abuse. Circulars that once appeared to place the TRC beyond challenge are now read more narrowly, particularly in the context of complex investment arrangements and indirect transfers.

This shift does not render TRCs irrelevant, but it decisively ends their role as a near-conclusive shield. Going forward, a TRC will be treated as a starting point rather than an endpoint in treaty analysis. Investors must therefore ensure that residence, control, and economic substance are defensible not merely in form, but in demonstrable fact.

What the Judgment Does Not Decide: Limits That Matter

Despite its length and strong language, the Tiger Global judgment is not a sweeping condemnation of Mauritius structures or cross-border tax planning. It does not hold treaty shopping to be illegal per se, nor does it automatically apply GAAR to all pre-2017 investments. Crucially, it does not determine Tiger Global’s final tax liability. The ruling is jurisdictional, not fiscal. It governs who may access the AAR and under what conditions, not who ultimately pays tax or in what quantum.

This distinction is critical. At the assessment stage, the Revenue must still satisfy statutory requirements to invoke GAAR, establish impermissible avoidance, and justify attribution, valuation, penalties, and interest. Those battles remain open, and taxpayers retain significant defensive space, albeit in a more hostile environment.

Conclusion: A New Architecture of Risk and Certainty

The Tiger Global decision marks a decisive evolution in Indian international tax jurisprudence. It reflects a judiciary increasingly attuned to global anti-avoidance norms and willing to recalibrate institutional roles to protect the tax base. For investors, the message is clear: certainty is no longer front-loaded through advance rulings but must be earned through demonstrable substance, coherence, and alignment between form and commercial reality.

For advisors and policymakers alike, the judgment focuses on the need for clearer treaty drafting, calibrated use of anti-avoidance tools, and renewed engagement with investor confidence. The challenge ahead lies in ensuring that the pursuit of tax integrity does not come at the cost of predictability – a balance that will define the next chapter of India’s cross-border tax landscape.