Samsung $520 million tax demand under scrutiny in India.
Samsung $520 million tax demand has been challenged by the company before an Indian tribunal, arguing that its import practices matched those previously followed by Reliance Industries. The case involves alleged misclassification of telecom equipment imported between 2018 and 2021, which Samsung supplied to Reliance Jio. According to Indian tax officials, the classification enabled Samsung to avoid customs duties ranging from 10% to 20%.
The case makes Samsung the latest foreign firm to challenge India’s customs duty assessments. In a similar instance, German automaker Volkswagen is contesting a $1.4 billion tax claim for misclassifying imported components.
Filing Reveals Samsung Cites Awareness by Authorities
In a 281-page filing submitted to the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in Mumbai, Samsung said Indian authorities were aware of its classification method for years. The company pointed to Reliance Jio’s earlier practice of importing the same equipment without paying tariffs until it was warned in 2017. Samsung claims it was never informed of this warning and that customs officials never questioned its import classification during the 2018–2021 period.
‘The classification adopted by the appellant was known to the authorities, however the same was never questioned,’ the filing reads. Samsung alleges that Reliance failed to communicate the 2017 warning, contributing to the current dispute.
$601 Million Total Claim and Key Equipment Involved
The case involves a component called the ‘Remote Radio Head,’ critical for 4G telecom infrastructure. Tax officials say Samsung imported nearly $784 million worth of the equipment from Korea and Vietnam and classified it under categories with lower tariffs.
In addition to the $520 million demand, authorities have fined seven Samsung employees a total of $81 million, bringing the total claim to $601 million. The company has not confirmed if the employees will file separate appeals.
Samsung Accuses Officials of Rushing the Tax Order
Samsung argues the tax order issued in January 2025 was rushed and that it wasn’t given a proper chance to respond. The company says the classification had been accepted during prior inspections. Indian officials, however, accuse Samsung of knowingly violating norms to maximise profits, saying it ‘transgressed all business ethics.’
The tribunal’s decision could influence future disputes involving import classifications in India.
Samsung’s ongoing tax dispute highlights the complexities of customs regulations and the importance of proper import classification. Businesses facing similar challenges may find it difficult to navigate India’s intricate tax system. If your company is dealing with misclassification issues or facing hefty tax demands, seeking professional guidance can make all the difference. For assistance with customs compliance, tax disputes, and import classifications, consult Vakilsearch. Our expert team is here to help.
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