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\u2019s 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 Prime Minister Narendra Modi\u2019s government in court for a record demand of $1.4 billion for misclassifying its component imports. In the Samsung case, tax authorities in January asked Samsung to pay $520m for evading the 10-20 per cent tariffs by misclassifying imports of a key mobile tower equipment, which it then sold to billionaire Mukesh Ambani\u2019s telecom giant, Reliance Jio, from 2018 to 2021. In its 281-page challenge at the Customs Excise and Service Tax Appellate Tribunal in Mumbai, Samsung criticises Indian authorities for being \u201cfully aware\u201d of the business model as Reliance had a \u201clong-established practice\u201d of importing the same equipment without any tariff payments for three years until 2017. Samsung\u2019s 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. \u201cThe classification adopted by the appellant (Samsung) was known to the authorities, however the same was never questioned \u2026 Department was fully aware,\u201d Samsung says in its April 17 filing, which is not public but was seen by Reuters. \u201cReliance Jio officials did not inform\u201d Samsung about the tax warning of 2017, it adds. Samsung and India\u2019s tax authority did not respond to Reuters queries. Further details of Reliance\u2019s 2017 warning from tax authorities are not public and were not disclosed in the Samsung filing. Reliance didn\u2019t respond to Reuters queries. Other than $520m demand Samsung faces, Indian authorities have also imposed an $81m fine on seven of its employees, taking the total tax demand to $601m. It\u2019s not clear if Samsung employees are separately challenging the fines. The tax demand represents a substantial chunk of last year\u2019s net profit of $955m for Samsung in India, where it is one of the largest players in the consumer electronics and smartphones market. In defending its tariff declarations, Samsung also argues in its filing that the tax authority passed the order in January \u201cin a hurry\u201d and it was not provided \u201ca fair opportunity\u201d to present its case, despite the \u201chuge stakes\u201d involved. The Samsung case concerns imports of a component called \u201cRemote Radio Head\u201d, a radio-frequency circuit enclosed in a small outdoor module, that tax officials say is \u201cone of the most important\u201d parts of 4G telecoms systems. The case against Samsung alleges it misclassified the component\u2019s imports worth $784m from Korea and Vietnam between 2018 to 2021, to maximise profits. Investigators found that Samsung \u201ctransgressed all business ethics and industry practices or standards in order to achieve their sole motive of maximising their profit by defrauding the government exchequer\u201d, the January order stated.<\/p>\n","protected":false},"excerpt":{"rendered":"
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