India has delivered a Rs. 45.51 billion fine along with a penalty for Samsung and its Indian management for avoiding paying import taxes on crucial telecommunication equipment, as stated in a government order. This is one of the biggest such demands in recent times and has been made on the backdrop of Samsung earning $955 million net profit in India and leading the consumer electronics and smartphone markets last year. The company is within its rights to appeal to a tax tribunal or a court.
The demand was made in connection with the telecom network division of Samsung which came under scrutiny in 2023 for classifying its imports incorrectly in order to avoid 10% or 20% tariffs on a crucial part of a mobile tower. These items were imported to be sold to Reliance Jio, Ambani’s telecom giant. To India’s tax authorities, Samsung explained that the component was tariff exempt and that its classification had been previous authorized, and therefore the authority should put a stop to the probe. But one January 8 confidential customs order, which was obtained by Reuters, did not agree with this argument.
Sonal Bajaj, the Customs Commissioner, in a January 8 customs order which was seen by Reuters, declined Samsung’s request. Samsung, according to Bajaj, “violated” Indian laws and had “submitted false documents” to get through customs. The order further stated that the company has not only violated business ethics and industry norms but has also attempted to ‘maximize profit by defrauding the government’. The company was ordered to pay the 44.6 billion rupees ($520 million) in unpaid taxes and penalties at 100 per cent. Beside that, seven India-based executives, including Sung Beam Hong (network division VP), Dong Won Chu (CFO), Sheetal Jain (finance GM) and Nikhil Aggarwal (indirect taxes GM) are to be fined $81 million.
