Beyond The TRC: A Veil-Piercing Moment In International Tax Law

The Supreme Court's judgment in Authority for Advance Rulings (Income Tax) & others v. Tiger Global International Holdings 2026 LiveLaw (SC) 50 marks a moment where the long-standing tension in Indian tax law between form and substance is not merely acknowledged, but decisively addressed. Quietly, and without theatrics, the Court applies to international tax law an instinct long familiar to company law: the willingness to look past formal compliance when substance tells a different story.The case concerned whether gains arising from the sale of shares by Mauritian entities associated with Tiger Global were entitled to exemption under the India-Mauritius tax treaty, based on their Tax Residency Certificates. The Revenue contended that the Mauritian entities were mere conduits, lacking real control or commercial substance, and that the treaty benefit was being invoked to avoid tax in India.For decades, Indian tax law has lived with a certain productive tension. On the one hand lies form: incorporation, residence certificates, treaty text, and carefully constructed investment pathways. On the other lies substance: control, purpose, decision-making, and the uneasy sense that some structures exist less to do business than to avoid consequence.This is why the judgment deserves to be read not simply as a tax ruling, but as a veil-piercing moment for treaty law. Not the corporate veil as traditionally understood, but a treaty veil - one that separates paperwork from entitlement.A familiar instinct, deployed in an unfamiliar settingCourts have never been hostile to legal form. Incorporation matters. Contracts matter. Certificates matter. But courts have also never been naïve about them. Where form is deployed to disguise control, courts intervene. Where structure masks purpose, courts inquire.What is striking about Tiger Global is not the outcome, but the instinct animating it. The Court does not begin with the treaty. It begins with sovereignty. The opening paragraphs of the judgment anchor the discussion firmly in Article 265 of the Constitution and the State's inherent power to levy and collect tax in accordance with law. Treaties are acknowledged as instruments of cooperation, not as abdications of authority.That ordering does matter a great deal. It tells the reader how the Court is thinking before it ever reaches Tax Residency Certificates (TRCs) or Double Taxation Avoidance Agreements (DTAAs). Treaty obligations are real, but they operate within a constitutional frame that does not require the State to suspend disbelief when confronted with elaborate cross-border arrangements.TRCs as a starting point, not a destinationFew instruments in Indian tax lore have enjoyed the near-mythic status that Tax Residency Certificates once did. For years, the presence of a TRC was treated, in practice if not in theory, as a near-conclusive answer to questions of residence and treaty entitlement. Produce the certificate, and the inquiry largely ended.The Tiger Global judgment re-positions the TRC firmly where it belongs: at the threshold, not at the finish line.The Court does not deny the relevance of TRCs. It does not question their statutory recognition. What it does say, unmistakably, is that a TRC answers only the first question - where the entity claims residence. It does not answer the harder question: whether the structure, taken as a whole, deserves treaty protection for the transaction under scrutiny.This mirrors company law precisely. Incorporation establishes legal existence. It does not immunise a company from veil-piercing where control and purpose warrant closer examination. In the same way, treaty residence establishes eligibility to invoke the treaty. It does not guarantee the benefit of its most favourable provisions in every factual context.Therefore, the Court's analysis of control, decision-making authority, and economic substance is not incidental. It is central. The inquiry into who truly directs the affairs of the Mauritian entities, where key decisions are made, and whether the entities function as autonomous commercial actors or as conduits, is the tax analogue of asking where the “head and brain” of a company truly lies. That instinct is articulated most plainly when the Court observes, “undoubtedly, the mere holding of a Tax Residency Certificate cannot, by itself, prevent an inquiry subsequent to the amendments brought into the statute … if it is established that the interposed entity was a device to avoid tax.” (para 43 of the judgment). As the Court itself noted, treaty residence alone cannot be determinative where the situs of control, the locus of decision-making and the commercial rationale of the interposed entities reveal a structure divorced from economic substance.This mode of inquiry is not unfamiliar to tax law. Long before Tiger Global, courts tasked with determining residence and effective management consistently looked past formal indicia to locate the...

Beyond The TRC: A Veil-Piercing Moment In International Tax Law

Rajasekhar V.K

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