Samsung Challenges $520 Million Tax Demand in India, Cites Reliance Precedent
Samsung has challenged a $520 million tax notice in India, claiming that the Indian tax authorities were aware of the misclassification of imports and had tolerated the same by Reliance Jio, the telecom behemoth controlled by billionaire Mukesh Ambani. The tax authorities have charged Samsung with evading tariffs between 10% and 20% on networking gear, which Samsung sold to Reliance between 2018 and 2021.
In a 281-page comprehensive submission to the Customs Excise and Service Tax Appellate Tribunal in Mumbai, Samsung had argued that Indian tax authorities had for years known about the business model. As per the filing, Reliance Jio had been importing the same machinery duty-free for a few years prior to 2017. Samsung's lawyers also noted that Reliance had been notified by tax authorities about this in 2017 but had not brought it to Samsung's notice and that the tax department had never questioned anything in regard to the way Samsung had classified imports.
Samsung's application blames Indian tax authorities for failing to challenge the classification earlier, saying the practice was familiar to officials but was never queried. The company additionally argued that tax authorities had had full knowledge of the classification chosen by Samsung that aligned with practices at Reliance. Yet still, the authorities failed to lodge any objections while carrying out investigations.
Aside from the tax demand of $520 million, Indian authorities have also charged seven employees of Samsung with an $81 million fine, raising the total demand to $601 million. The details of the 2017 notice issued to Reliance Jio by tax officials are not known, and Reliance declined to comment on the issue.
Samsung is the second significant foreign firm to dispute a significant tax notice issued by India over the past few months. Volkswagen has also pursued a lawsuit over a record tax notice of $1.4 billion for the misclassification of component imports. Samsung and Indian tax authorities have not commented further on the case.
