Samsung cites RIL policy to challenge tax demand

NEW DELHI: Samsung has asked an Indian tribunal to quash a $520 million tax demand for allegedly misclassifying imports of networking gear, arguing officials were aware of the practice as India’s Reliance imported the same component in a similar manner for years, documents show.

Samsung becomes the second major foreign company in recent months to challenge an Indian tax demand. Volkswagen has sued Indian govt in court for a record demand of $1.4 billion for misclassifying its component imports.

In the Samsung case, tax authorities in Jan asked the Korean company to pay $520 million for evading the 10-20% tariffs by misclassifying imports of a key mobile tower equipment, which it then sold to Reliance Jio, from 2018 to 2021.

In its 281-page challenge at the Customs Excise and Service Tax Appellate Tribunal in Mumbai, Samsung criticises authorities for being “fully aware” of the business model as Reliance had a “long-established practice” of importing the same equipment without any tariff payments for three years until 2017.

Samsung’s India unit says it discovered during an Indian tax investigation that Reliance had been warned about the practice way back in 2017, but Reliance did not inform the South Korean company about it and tax officials never questioned Samsung.

Reliance didn’t respond to Reuters queries. Other than $520 million demand Samsung faces, Indian authorities have also imposed an $81 million fine on seven of its employees, taking the total tax demand to $601 million.

This is a Reuters' story

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