The Tiger Global Judgment: What Went Wrong, What Was Decided, and What Still Remains Open

Introduction

The Supreme Court’s judgment in Authority for Advance Rulings v. Tiger Global International Holdings represents a watershed moment in India’s international tax jurisprudence. While the immediate outcome favoured the Revenue and reversed the Delhi High Court’s decision, the case is more instructive for what it reveals about litigation strategy, doctrinal framing, and the evolving role of anti-avoidance principles at the threshold stage.

This article examines two critical questions of lasting relevance to taxpayers and advisors alike: (i) what strategic and legal points were missed in the conduct of the litigation, and (ii) what legal and procedural options remain available even after the Supreme Court’s decision.

The Core Strategic Miss: Allowing a Jurisdictional Question to Become a Merits Adjudication

At its heart, the dispute arose from the AAR’s refusal to admit Tiger Global’s application under Section 245R(2), on the ground that the transaction was “prima facie designed for the avoidance of tax”. The most consequential strategic lapse lay in failing to confine the controversy strictly to the limits of the AAR’s jurisdiction.

The proviso to Section 245R(2) is a threshold bar. It is not intended to function as a surrogate for a full-fledged assessment, nor as a forum for conclusively determining issues of control, beneficial ownership, or commercial substance. Yet, from the AAR stage onwards, the litigation allowed the enquiry to migrate from whether the AAR could refuse to answer to whether the structure was abusive. Once this shift occurred, the case entered terrain where Revenue enjoys structural advantage, particularly in a post-GAAR environment.

A more successful strategy would have ring-fenced the inquiry by emphasising that any determination requiring deep factual evaluation, weighing of competing inferences, or application of anti-avoidance doctrines necessarily falls outside the AAR’s limited mandate. By not holding this jurisdictional line with sufficient doctrinal force, the litigation permitted the Supreme Court to endorse a broadened conception of “prima facie” scrutiny, with consequences extending well beyond the Tiger Global facts.

The Missed Separation Between GAAR and AAR Jurisdiction

A second, and closely related, omission was the failure to draw a clean doctrinal boundary between GAAR as a statutory regime and the AAR’s threshold enquiry. GAAR is accompanied by elaborate procedural safeguards, including reference to an approving panel, shifting burdens of proof, and assessment-stage invocation. These safeguards are not incidental; they are integral to the legitimacy of GAAR as an exceptional anti-avoidance measure.

In Tiger Global, GAAR was never formally invoked. Yet, GAAR concepts such as lack of commercial substance, pre-ordained arrangements, and misuse of treaty benefits were permitted to inform the AAR’s jurisdictional decision. The litigation did not sufficiently challenge this conflation. A more forceful argument would have been that GAAR principles cannot be imported “by analogy” to justify denial of AAR access, particularly when Parliament itself has prescribed a specific procedural architecture for their application.

By allowing GAAR logic to permeate the threshold stage without insisting on GAAR discipline, the case inadvertently normalised the idea of “GAAR without GAAR”, a development that now carries precedential weight.

Indirect Transfers and the Unchecked Bifurcation of Treaty Protection

Another critical area where the case could have been framed more effectively concerns the treatment of indirect transfers vis-à-vis treaty grandfathering. The Supreme Court accepted a strict bifurcation: direct transfers falling within Articles 13(3A) and 13(3B) of the India-Mauritius DTAA, and indirect transfers being relegated to Article 13(4), outside the grandfathering regime.

What was not sufficiently pressed was the conceptual distinction between chargeability under domestic law and allocation of taxing rights under a treaty. Even where domestic law deems an indirect transfer to give rise to Indian-sourced income, the treaty continues to govern whether India may exercise that taxing right. The absence of explicit language extending grandfathering to indirect transfers does not necessarily imply exclusion, particularly where the economic substance of the investment and the accrual of value pre-date the treaty amendment.

The failure to decisively challenge this interpretative leap allowed the Court to treat treaty silence as determinative, thereby narrowing the protective scope of grandfathering provisions in a manner that may not have been inevitable.

Under-Utilisation of Constitutional and Certainty-Based Arguments

The phrase “prima facie designed for avoidance” performs heavy work in the statutory scheme, yet remains undefined. The litigation did not meaningfully explore whether such an open-textured standard, when applied at a jurisdiction-denying stage, raises concerns of vagueness, arbitrariness, and excessive discretion, particularly in the context of Article 265 of the Constitution.

Nor was sufficient emphasis placed on legitimate expectations and investor reliance, especially where treaty amendments were consciously made prospective and accompanied by explicit grandfathering. A stronger constitutional framing could have constrained the interpretative latitude afforded to the AAR and reinforced the principle that tax certainty is itself a component of the rule of law.

What the Supreme Court Decided – and What It Did Not

It is equally important to recognise the limits of the judgment. The Supreme Court did not determine Tiger Global’s final tax liability. It did not formally apply GAAR. It did not hold Mauritius structures to be inherently abusive, nor did it declare treaty shopping unlawful per se. The ratio of the case is jurisdictional, not fiscal. It concerns access to the AAR, not the ultimate outcome of assessment proceedings.

This distinction has practical significance. While the door to advance rulings has been closed in cases presenting complex anti-avoidance questions, the substantive contest over taxability, valuation, attribution, penalties, and interest remains open at the assessment and appellate stages.

What Can Still Be Done: The Post-Judgment Legal Landscape

Even after the Supreme Court’s decision, several avenues remain available:

Assessment-Stage Defences

The Revenue must still comply with the statutory requirements of GAAR if it seeks to invoke it. Procedural lapses, inadequate approval, or failure to establish impermissible avoidance remain fertile grounds of challenge.

Containment of Precedent

The judgment can and should be confined to its facts particularly its emphasis on AAR jurisdiction and indirect transfers. It does not foreclose treaty protection in all Mauritius-routed investments.

Valuation and Attribution Challenges

Even where chargeability is assumed, disputes over valuation methodology, extent of Indian nexus, and proportional attribution remain legally contestable.

Settlement Without Precedent

In appropriate cases, taxpayers may consider settlement mechanisms to cap exposure, while expressly reserving doctrinal positions to avoid adverse precedential spill-over.

Future Structuring and Exit Planning

Perhaps the most enduring lesson lies in future conduct: AAR should no longer be the default forum for complex exits, and substance, governance, and decision-making must be demonstrable contemporaneously, not reconstructed defensively.

Conclusion

The Tiger Global judgment does not signal the end of treaty protection, nor does it render historical investment structures indefensible. What it does signal is a judicial willingness to front-load anti-avoidance scrutiny and to permit threshold forums to engage in deeper evaluative exercises than previously assumed.

For taxpayers and advisors, the case is a reminder that how an issue is framed can be as decisive as the law itself. What was missed in Tiger Global offers valuable lessons, and what remains open provides equally important opportunities provided they are approached with doctrinal precision and strategic clarity.