Andhra HC quashes tax demand on Sanofi over Shantha Biotech buyout
15 Feb 2013
The Andhra Pradesh High Court has quashed the income tax department's Rs700-crore tax demand on French drug maker Sanofi Aventis over its buyout of Hyderabad-based vaccine maker Shantha Biotech in 2009.
Sanofi Pasteur, the vaccine division of Sanofi-Aventis, had, in July 2009, acquired ShanH, which held a majority stake in Shantha Biotechnics, a privately held maker of vaccines against Hepatitis B, Diphteria and Tetanus, among others.
ShanH, the French subsidiary of Merieux Alliance, had bought majority stake in Shantha Biotechnics in November 2008.
The I-T department had raised the tax demand claiming that the Rs3,800-crore cross-border merger resulted in capital gains and the stakeholders therefore came under the jurisdiction of Indian income tax rules.
According to the income tax department, Sanofi had gained new market and platform for its products through the acquisition of Shantha Biotech.
The I-T department said Sanofi had set up a shell company called ShanH six days before the deal was signed in order to evade taxes.