A day after the country's top court ruled in favour of the revenue in the Tiger Global-Flipkart tax dispute, CBDT sources said that the Rs 967.5-crore tax refund claimed by Tiger Global is likely to be adjusted against the final tax demand, as assessment proceedings for Assessment Year 2019–20 now revive.
The refund amount, which was withheld under Section 241A of the Income Tax Act, will be examined as part of the final assessment to be completed in line with the Supreme Court's ruling. Officials said no final determination was possible earlier since the taxability of the transaction itself was pending before the apex court.
The withholding of the refund, officials stressed, was an interim measure adopted in a situation where the issue of taxability could not be conclusively decided at the assessment stage. The dispute traces back to Tiger Global's exit from Flipkart in 2018, as part of Walmart's acquisition of a controlling stake in the e-commerce major in a global transaction valued at around $16 billion.
The exit resulted in capital gains exceeding Rs 14,500 crore, which became the subject of the tax dispute. Of this Rs 13,122 crore was received by Tiger Global International II (Mauritius), Rs 1,259 crore by Tiger Global International III (Mauritius) and Rs 58 crore by Tiger Global International IV (Mauritius).
Tiger Global had claimed exemption under the India-Mauritius tax treaty, citing grandfathering provisions and valid tax residency certificates. The tax department, however, challenged the structure, alleging treaty abuse and impermissible avoidance.
CBDT underlined that the litigation is a statutory right and taxpayers are entitled to exhaust appellate channels; the department must await final judicial outcome.
Such disputes, given their complexity and magnitude, remain under litigation for extended periods until finality at the highest judicial forum. The judgment emphasises the State's right to protect its tax base and safeguard public revenue. It stated that In high-value transactions, large tax figures flow from the size of the transaction itself. All tax disputes cannot be labelled as overreach or "tax terrorism", many arise from genuine differences of interpretation.
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