Samsung Challenges $520 Million Tax Demand in India
Samsung has formally challenged a $520 million tax demand by Indian authorities over alleged import misclassification, citing similar practices previously used by telecom giant Reliance Jio. The South Korean tech major filed a 281-page appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT) in Mumbai, requesting that the order be quashed.
Samsung has formally challenged a $520 million tax demand by Indian authorities over alleged import misclassification, citing similar practices previously used by telecom giant Reliance Jio. The South Korean tech major filed a 281-page appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT) in Mumbai, requesting that the order be quashed.
The dispute centers around the import of a telecom component known as the Remote Radio Head, which Indian tax officials argue is a critical part of 4G mobile towers. Between 2018 and 2021, Samsung imported $784 million worth of the component from Korea and Vietnam, allegedly misclassifying the item to evade import duties ranging from 10% to 20%.
In its tribunal filing dated April 17, Samsung contends that Indian authorities were “fully aware” of its import classification, arguing that Reliance had engaged in similar practices for years before 2017, without facing penalties. “The classification adopted by the appellant (Samsung) was known to the authorities, however the same was never questioned,” the company wrote in its filing, reviewed by Reuters.
Samsung further claims that Reliance, a key buyer of the imported equipment, failed to notify it of a 2017 warning issued by tax authorities regarding similar imports. “Reliance Jio officials did not inform” Samsung about the earlier tax concerns, the filing states.
In addition to the $520 million tariff-related demand, Indian authorities have imposed an $81 million fine on seven Samsung India employees, bringing the total to $601 million. It remains unclear whether the employees plan to challenge these individual penalties.
The tax bill represents a significant portion of Samsung India’s operations—over 60% of its 2024 net profit of $955 million. The company claims it was not given a fair hearing before the order was passed in January and described the process as being handled “in a hurry.”
This case makes Samsung the second major foreign corporation to take legal action against Indian tax demands in recent months. In a parallel situation, German automaker Volkswagen has filed a lawsuit against the Indian government over a $1.4 billion tax claim also linked to import classifications.
The Indian tax authority and Reliance Jio have so far not responded to media queries, and details of the 2017 warning to Reliance remain undisclosed.
The controversy raises broader concerns among multinational companies about India’s tax administration, particularly around retrospective claims and classification disputes in the import sector.
Sources By Agencies
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