Samsung India Executives Move to Court for $81 Mn Penalties Revocation Over Tax Evasion

Samsung India executives have moved to a court for revocation of penalties of $81 million. Seven Samsung India executives have argued that “no grave offence” had been committed by them, Reuters reported, citing legal papers and a source. The $81 million penalty is part of the $601-million tax demand slapped on Samsung for alleged wrong classification of certain imports by the tax authority. 

The development comes months after the tax authority accused Samsung India and its several executives for tariffs evasion.

Tax Authority vs Samsung 

The tax authorities alleged that Samsung India had evaded around 10-20% tariffs by misclassifying imports of a key mobile tower equipment called “Remote Radio Head”. The component is a radio-frequency circuit enclosed in a small outdoor module that tax officials said is “one of the most import” parts of 4G telecom systems.  

The misclassified component’s worth $784 million was reportedly imported from South Korea and Vietnam between 2018 and 2021 and then sold to Mukesh Ambani-led telecom giant, Reliance Jio. The government authority reportedly said that the electronics maker violated all business ethics. 

“[Samsung] transgressed all business ethics and industry practices or standards in order to achieve their sole motive of maximising their profit by defrauding the government exchequer,” Reuters reported, citing the tax authority’s order. 

Samsung, however, claimed that the business model was already in practice, as Reliance had a “long-established practice” of importing the same equipment without any tariff payments for three years prior to 2017. The electronics maker had mentioned that Reliance had been warned against the practice in 2017, but the Mukesh Ambani-led giant had reportedly failed to inform the South Korean company regarding the same. 

“The classification adopted by the appellant [Samsung] was known to the authorities, however the same was never questioned... department was fully aware,” Samsung said in a filing, according to Reuters.