New Delhi, Jan. 15 -- The Supreme Court ruled that Tiger Global is liable to pay capital gains tax on its sale of Flipkart shares more than seven years ago, in a precedent-setting verdict for investors from countries with which India has tax treaties.

A bench of justices J.B. Pardiwala and R. Mahadevan said the real control of Tiger Global's Mauritian entities lay with its US parent, backing the tax department's position. Once the mechanism of using Mauritian entities is found to be illegal or sham, it ceases to be "a permissible avoidance" and becomes "an impermissible avoidance" or "evasion", the apex court ruled.

In 2018, the Mauritian entities of Tiger Global sold shares of Flipkart Singapore (which owned Flipkart India) to Walmart ...