Indian Supreme Court Will Not Review Decision On Mauritius DTA

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

16 March 2004

The Indian Supreme Court has dismissed a review petition filed over its recent decision to uphold a government circular issued with regard to the Indo-Mauritian DTA.

Attempting to address concerns that third countries were using companies established in Mauritius to route investment into India, in order to take advantage of the provisions of the treaty, the Indian government in 2000 issued a circular announcing that:

"Wherever a Certificate of Residence is issued by the Mauritian authorities, such Certificate will constitute sufficient evidence for accepting the status of residence as well as beneficial ownership for applying the DTAC (Double Tax Treaty) accordingly."

The circular was challenged by a number of entities, and additionally before the Delhi High Court by a retired tax officer. Although the Delhi High Court in May 2002 quashed the circular on the grounds that it gave an unnecessary tax holiday to foreign institutional investors and deprived the exchequer of tax revenue, the High Court overturned that ruling last year.

The decision to reject the review petition has been welcomed by firms based in Mauritius as providing clarity with regard to their tax situation.

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