Samsung Challenges $520 Million Tax Demand; Claims Jio Imported Similar Equipment

South Korean multi-national appliance and consumer electronics company Samsung has asked an Indian tribunal to quash a $520 million tax demand, according to a report by Reuters.

The tax demand raised is for allegedly misclassifying imports of networking gear. The company argued that officials were aware of the practice as Reliance Industries Ltd. imported the same component in a similar manner for years.

Earlier this year, Volkswagen India also reportedly sued the Union of India to quash an “impossibly enormous” tax demand of $1.4 billion, arguing the ask is contradictory to the government’s import taxation rules.

In the Samsung case, tax authorities in January asked Samsung to pay $520 million for evading the 10-20% tariffs by misclassifying imports of a key mobile tower equipment, which it then sold to 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 criticised Indian 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, Reuters reported.

The report also said that Samsung's India unit discovered during an Indian tax investigation that RIL had been warned about the practice way back in 2017, but did not inform the South Korean company about it.