New Delhi: Tax authorities have ordered Samsung and its executives in India to pay USD 601 million in back taxes and penalties for dodging tariffs on import of key telecoms equipment, Reuters reported.The order, one of the biggest demands ever from an electronics or smartphone company, will take away a whopping chunk from Samsung’s net profit of USD 955 million in India last year.The South Korean electronics major, which also imports telecoms equipment through its network division, received a warning by authorities in 2023 for misclassifying imports to evade tariffs of 10% or 20% on a critical transmission component used in mobile towers.According to a report by Outlook Business, Samsung had not paid duties on imports worth USD 784 million between 2018 and 2021. Its offices in Mumbai and Gurugram were searched in 2021.These telecom components were imported and sold to billionaire Mukesh Ambani’s Reliance Jio.According to the Reuters report, Samsung has pushed India’s tax authority to drop the scrutiny, saying the component did not attract tariffs and officials had known its classification practice for years. However, customs authorities disagreed, the report said.As per the order accessed by Reuters, Sonal Bajaj, a commissioner of customs, said that Samsung “violated” Indian laws and “knowingly and intentionally presented false documents before the customs authority for clearance” It “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,” the order reportedly stated.“Samsung is a responsible corporation and fully complies with the laws in India. The issue involves the interpretation of classification of goods by Customs. We are assessing legal options to ensure that our rights are fully protected,” a Samsung India said in a statement.Samsung is not the only company in this situation. Volkswagen and New Delhi have been locked in a legal battle since February this year as the automaker was asked to pay USD 1.4 billion in import back taxes on grounds of misclassifying car parts. Hyundai Motor India has also faced a similar tax demand of Rs 15 crore from GST authorities for the fiscal years 2020-21 and 2021-22, Outlook Business reported.
