Samsung challenges Indian tax claim of $520 million.
Court documents revealed that Samsung has challenged an Indian tax claim of $520 million, stemming from accusations of misclassification of imports of telecommunications network equipment.
Samsung confirmed that tax authorities were aware of this practice, especially since Indian company Reliance Jio imported the same components in a similar manner for years without additional customs duties.
Samsung becomes the second major foreign company to challenge Indian tax claims in recent months, following Volkswagen's lawsuit against Prime Minister Narendra Modi's government for demanding $1.4 billion due to misclassification of car parts imports.
Case Details
In January, the Indian tax authority accused Samsung of evading customs duties ranging from 10% to 20% by reclassifying imports of key equipment for communication towers, later sold to Reliance Jio owned by billionaire Mukesh Ambani between 2018 and 2021.
In a detailed 281-page legal appeal filed with the Mumbai appellate court specialized in customs, indirect taxes, and service taxes, Samsung criticized the deliberate oversight by Indian authorities of its business model, pointing out that Reliance Jio imported the same equipment "in an established practice" without additional customs duties until 2017.
Samsung clarified that a tax investigation revealed that Reliance Jio received a warning from authorities in 2017, but this information was not conveyed to the South Korean company, and no direct investigation was conducted with Samsung officials.
Additional Fines and Fraud Allegations
In addition to the primary claim, Indian authorities imposed additional fines of $81 million on seven Samsung employees, bringing the total amount demanded to $601 million.
Samsung responded that the tax decision issued in January was made "hastily," without granting them a "fair opportunity" to present their defenses, despite the "enormous stakes" involved in the case.
Indian authorities accuse Samsung of reclassifying imports of components worth $784 million from South Korea and Vietnam between 2018 and 2021, aiming to "maximize its profits through customs evasion."
The ruling stated that investigators found the company "violated all work ethics and industry standards to achieve its sole goal of maximizing profits by defrauding the state treasury."
