The Delhi High Court on Tuesday quashed tax proceedings against Israeli drugmaker Teva Pharmaceutical Industries Ltd. and its US affiliate arising from a deal with Ranbaxy Laboratories, and ordered the income tax department to refund about ₹783 crore to Teva Israel. According to reports from Mint, a bench of Justice Dinesh Mehta and Justice Vinod Kumar found that the tax proceedings against Teva USA were time-barred and without jurisdiction, quashing the notices and proceedings arising from them. The court also allowed Teva Israel's plea seeking a refund of tax deducted in India on payments received for assessment years 2012-13, 2013-14 and 2014-15. This brings relief to Teva in a nearly nine-year-old court battle over the payments linked to erstwhile Ranbaxy, now part of Sun Pharmaceutical Industries.
The court directed the tax department to refund the ₹783 crore, along with applicable interest, within two months, subject to compliance with court-imposed conditions. As reported by Mint, the refund is subject to Teva complying with conditions including providing the required corporate guarantee or solvent surety. The written judgment was not available at press time to assess the full reasoning and potential impact of the ruling on multinational companies that move contractual rights or payments between group companies in different countries.
In 2010, Ranbaxy entered into an agreement with Teva Pharmaceuticals USA over the sale of a generic version of the cholesterol drug atorvastatin in the US. According to Mint reports, a commercial dispute developed between the companies, and Teva USA sued Ranbaxy in the US. The companies eventually settled the dispute in December 2011 through a revised agreement where Ranbaxy was allowed to sell the drug but agreed to share 50% of its profits from the product with Teva. The original agreement was between Ranbaxy and Teva USA, but Teva USA later transferred its right to receive payments to Teva Pharmaceutical Industries Ltd. in Israel.
The income-tax department questioned why the money was ultimately being paid to Teva Israel when the original agreement was with Teva USA. As reported by Mint, the revenue department alleged that the transfer of the right to receive the money was structured to obtain a tax advantage under the India-Israel tax treaty. The proceedings were launched under Section 148 of the Income-tax Act, 1961, which allows the tax department to reopen an earlier tax assessment when it believes income that should have been taxed had escaped assessment.
Teva Pharmaceutical Industries is Israel's largest drugmaker and one of the world's biggest generic-drug manufacturers, reporting $17.3 billion in revenue in 2025. According to Mint, it has a significant India presence, operating through nine legal entities, employing more than 3,500 people and running manufacturing and R&D facilities. Sun Pharma acquired Ranbaxy in 2014 for $3.2 billion, after regulatory and quality-control issues had weakened Ranbaxy's US business. The merger was completed in March 2015.
