No CG tax on Sanofi for Shantha deal: HC

ShanH is an independent corporate entity, registered and resident in France. ShanH has commercial substance and a purpose and is not a nominee of Merieux Alliance, the law firms said. Since its inception in 2006, ShanH acquired and continues to hold shares in Shantha Biotechnics and there is no warrant to lift the corporate veil in the present circumstances.

According to the counsel, the transaction of the sale of shares of ShanH by the French company Sanofi is not a design for tax avoidance. The transaction is chargeable to tax in France, in terms of the provisions of the DTAA, and retrospective amendments to the Act have no impact on the DTAA.

Earlier also, giving a blow to the revenue authorities in their pursuit of taxing cross-border deals, the Andhra Pradesh High Court had dismissed the tax man’s plea against the Authority for Advanced Rulings (AAR) admission of Sanofi’s application regarding the Shantha Biotech deal. Sanofi had approached the AAR to determine the taxability of the deal. The AAR had concluded that the transaction was a preordained scheme to avoid tax in India and share transfer was taxable in India. Among other arguments, Sanofi had relied on the Indo-French treaty to defend its position that the gains are not taxable in India. Sanofi had argued that there was no alienation in shares of the Indian company.

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* French drug multinational Sanofi is liable to pay tax in France for the R3,800-crore Shantha Biotech deal

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