Sanofi tax case requires consideration, says Supreme Court
The bench comprising justices Anil R. Dave and A.K. Goel said the case would be heard fully
New Delhi: The Supreme Court on Tuesday admitted the income tax department’s appeal against a 2013 Andhra Pradesh high court ruling that said that France-based Sanofi SA was not required to pay tax in India for its acquisition of Hyderabad-based Shanta Biotechnics.
The bench comprising justices Anil R. Dave and A.K. Goel said the case would be heard fully. “The case requires some consideration. We have granted leave in the case,” Dave said.
Sanofi Pasteur Holding bought a majority stake in Shantha Biotechnics in 2009 by purchasing ShanH, which owned 80% of Shantha, from French bio-industrial group Merieux Alliance.
Although the deal took place in France, the Indian tax department asked Sanofi to pay Rs.985 crore in 2010 on the grounds that the underlying assets being transferred were in India.
The Andhra Pradesh HC had relied on India-France principle under the avoidance of double taxation agreement between the countries and the Vodafone tax case rulings of the apex court to arrive at its verdict.
The counsel for Sanofi on Tuesday told the court that the company was covered by the apex court’s ruling on Vodafone tax case.
The court in 2012 had ruled that the income tax department had no say over the $11.08-billion worth deal in which Vodafone Group Plc bought Hutchison Essar Telecom in April 2007. The government had claimed a $2.5-billion tax on the ground that the transaction involved purchase of assets of an Indian company.
Subsequent to the court ruling, the government had introduced retrospective amendments to tax laws allowing the income tax department to tax indirect transfer of shares if the underlying assets were in India. It also introduced a validation clause that could override any court judgement.
