Samsung has approached an Indian tribunal seeking to overturn a tax demand of $520 million (approximately Rs. 4,381 crore), which alleges that the company misclassified imports of networking equipment. The technology giant contends that Indian officials were aware of this practice, noting that India’s Reliance had similarly imported the same components for years without issue, according to court documents.
This move marks Samsung as the second significant foreign entity in recent months to contest a tax claim in India. Volkswagen is currently in litigation against the Indian government for a record tax demand of $1.4 billion (around Rs. 11,797 crore) related to the misclassification of its component imports.
The tax authorities issued the $520 million demand to Samsung in January, accusing the company of evading 10-20 percent tariffs by misclassifying imports of vital mobile tower equipment sold to Mukesh Ambani’s telecom company, Reliance Jio, from 2018 to 2021.
In a detailed 281-page submission to the Customs Excise and Service Tax Appellate Tribunal in Mumbai, Samsung criticized the Indian tax authorities for having been “fully aware” of its business model, particularly since Reliance had engaged in a “long-established practice” of importing the same equipment tariff-free for three years until 2017.
Samsung’s Indian subsidiary asserts that during a tax investigation, it was revealed that Reliance had been cautioned about this practice in 2017. However, it claims that Reliance did not relay this information to Samsung and that tax officials never raised any questions regarding Samsung’s imports.
“The classification adopted by the appellant (Samsung) was known to the authorities; however, it was never questioned. The department was fully aware,” Samsung stated in its filing dated April 17, which has not been made public but was reviewed by Reuters.
Furthermore, the filing claims that “Reliance Jio officials did not inform” Samsung about the tax warning issued in 2017.
Neither Samsung nor the Indian tax authority addressed inquiries from Reuters regarding the matter.
Details surrounding Reliance’s 2017 warning from tax officials remain unpublished and were not included in Samsung’s submission. Reliance has not responded to Reuters’ requests for comment.
In addition to the $520 million tax liability, Samsung also faces an $81 million (around Rs. 682 crore) penalty imposed on seven of its employees, bringing the total tax demand to $601 million (approximately Rs. 5,066 crore). It remains unclear if the affected employees are contesting the fines separately.
This tax demand represents a significant portion of Samsung’s net profit from the previous year, which was $955 million (about Rs. 8,050 crore) in India, a key market for the company’s consumer electronics and smartphone sectors.
In its defense, Samsung argues that the tax authority acted hastily in issuing the demand in January and did not allow the company a “fair opportunity” to present its case, despite the considerable stakes involved.
The case revolves around the importation of a component known as the “Remote Radio Head,” a critical radio-frequency circuit packaged in a compact outdoor module. Tax officials have described this component as “one of the most important” elements of 4G telecommunications systems.
Investigators stated in the January order that Samsung allegedly misclassified the imports of this component, valued at $784 million (approximately Rs. 6,609 crore), from Korea and Vietnam between 2018 and 2021 to increase profits. The order claimed that Samsung “transgressed all business ethics and industry practices or standards” in an effort to maximize profits by defrauding the government.
© Thomson Reuters 2025
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
