Author: Ashwarya Sharma, Advocate & Co-Founder, RB LawCorp
Date: 10/02/2026
1. Introduction
The concept of tax sovereignty has re-emerged as a defining theme in contemporary fiscal discourse. In an era shaped by cross-border capital flows, multilateral tax frameworks, and increasing economic interdependence, the power to design and enforce tax policy has assumed renewed constitutional significance.
In Authority for Advance Rulings (Income Tax) v. Tiger Global International II Holdings – [2026] 182 taxmann.com 375 (SC), the Supreme Court, particularly through the concurring opinion of Hon’ble Mr Justice J.B. Pardiwala, delivered an important reflection on the evolving contours of tax sovereignty in a globalised order.
Although the decision arises within the domain of direct taxation, its constitutional observations transcend income tax law. The judgment invites a deeper inquiry into whether international tax harmonisation can coexist with fiscal autonomy, and how sovereign taxing power must be exercised in a world increasingly influenced by multilateral coordination.
2. Tax Sovereignty in a Globalised Economic Order
Sovereignty in the modern era is no longer confined to territorial borders. Economic activity routinely transcends jurisdictions, creating tensions between domestic revenue interests and international tax cooperation.
Global institutions and multilateral initiatives often seek harmonisation of tax rules in the name of transparency, anti-avoidance, and investment facilitation. While cooperation is necessary, it frequently introduces asymmetry in bargaining power, particularly between developed and developing economies.
In this milieu, the assertion of tax sovereignty is not an act of resistance — it is an act of preservation.
3. Constitutional Dimensions of Tax Sovereignty
Unlike purely domestic taxation, international tax engagement involves a coordinated exercise of legislative authority, executive negotiation, and judicial interpretation.
Tax treaties, cross-border tax rules, and global tax initiatives must operate within constitutional boundaries. Any dilution of legislative intent or judicial scrutiny risks weakening the structural foundation of sovereignty itself.
The judgment underscores that tax sovereignty is not merely the power to levy tax, but the constitutional freedom to design fiscal policy aligned with national priorities, economic realities, and constitutional values.
4. India’s Evolving Fiscal Assertion
India’s economic trajectory reflects a growing confidence in asserting its fiscal interests. With a significant market base and increasing global relevance, India today negotiates from a position of comparative strength.
The challenge lies in balancing openness to global capital with preservation of regulatory and revenue autonomy. Fiscal engagement must not translate into fiscal submission.
5. GST as an Experiment in Pooled Sovereignty
From a GST practitioner’s standpoint, the discussion assumes distinctive relevance.
The introduction of GST in 2017 represents a landmark constitutional reform. Unlike international harmonisation frameworks, GST reflects a conscious pooling of sovereignty between the Union and the States.
Both levels of government simultaneously exercise taxing powers on the same transaction — not through compulsion, but through constitutional design. This structured internal harmonisation demonstrates that sovereignty can be shared without being surrendered.
The contrast with direct tax harmonisation at the international level is instructive.
6. Sovereignty and External Pressures
The assertion of tax sovereignty becomes critical where multinational corporations, foreign governments, or global institutions seek to influence domestic tax policy.
History demonstrates that powerful economies do not hesitate to adopt unilateral tax measures to safeguard their interests. Developing economies must therefore retain sufficient fiscal space to combat revenue erosion, illicit financial flows, and aggressive tax planning.
Weak or overly concessional tax frameworks may compromise not only revenue, but economic security itself.
7. Safeguards in International Tax Engagement
International cooperation must be accompanied by robust safeguards, including:
- Preservation of source-based taxation rights
- Carefully structured limitation of benefits provisions
- Protection of the digital tax base
- Alignment with constitutional principles
From a GST lens, this assumes added importance as cross-border digital supplies and destination-based taxation become increasingly central.
8. Broader Implications
The Tiger Global decision serves as a reminder that taxation is inseparable from sovereignty.
It reinforces that:
- Fiscal autonomy is a constitutional imperative
- Harmonisation must not dilute legislative intent
- International engagement must preserve domestic policy space
- Sovereign choice must remain sovereign
9. Conclusion
In an unsettled world, the ability of a nation to design, defend, and deploy its tax policy in alignment with its constitutional ethos is indispensable.
The Tiger Global judgment contributes meaningfully to this discourse. For GST practitioners, it offers a constitutional lens through which evolving global tax developments may be examined.
Taxation, ultimately, is not merely a fiscal instrument — it is an expression of sovereign will.
📎 Attached PDF for detailed reading 👉
📎 Full Published Version: https://www.taxmann.com/research/gst-new/top-story/105010000000027842/tax-sovereignty-in-an-unsettled-world-a-gst-practitioners-reading-of-tiger-global-and-the-future-of-fiscal-autonomy-experts-opinion
(The author is a practicing advocate, Co-Founder and Legal Head of RB LawCorp.
He specializes in GST law. Suggestions or queries can be directed to
ashsharma@rblawcorp.in. The views expressed in this article are strictly
personal.)
