Samsung is currently locked in a major legal battle with Indian tax authorities over a whopping ₹4,300 crore (about $520 million) tax demand. The issue? The government says Samsung didn’t pay proper import duties on some telecom equipment. But Samsung says: “Wait a minute – we weren’t the only ones doing this, and the authorities knew it all along!”
What’s the Case All About?
Between 2018 and 2021, Samsung imported a crucial telecom component called the Remote Radio Head – a small outdoor module that plays a key role in 4G networks. These parts came in from South Korea and Vietnam and were sold to Reliance Jio, one of India’s biggest telecom players owned by Mukesh Ambani.
The government says Samsung misclassified this equipment to avoid import tariffs of 10-20%, helping it save a large chunk of money and boosting profits. The total value of these imports? About $784 million. The authorities believe this was done deliberately and even said Samsung broke business ethics by doing so.
Samsung’s Side of the Story
In response, Samsung has taken the matter to the Customs Excise and Service Tax Appellate Tribunal (CESTAT) in Mumbai. In a massive 281-page appeal, Samsung argues:
- The Indian government was well aware of how this equipment was being imported.
- Reliance Jio had been importing the same components in a similar way for years – without paying any tariffs – until 2017.
- Samsung says they only found out that Reliance was warned by the tax department in 2017 during a later investigation – and that Reliance never shared this warning with them.
- At no point did Indian authorities question Samsung about the way they were classifying these imports during the years it was happening.
In their own words from the legal filing, Samsung said: “The classification adopted was known to the authorities and was never questioned. The department was fully aware.”
They also allege that when the final tax demand was passed in January 2024, it was rushed and they weren’t given a fair chance to defend themselves – despite the high stakes.
More Than Just One Penalty
Apart from the $520 million (₹4,300 crore) tax demand, Indian authorities have slapped an additional $81 million fine (around ₹670 crore) on seven Samsung employees. That brings the total to over $600 million (₹5,000 crore). It’s unclear whether those employees are also fighting the charges separately.
To put that into perspective, Samsung made a net profit of $955 million in India last year – so this tax case involves more than half of its annual profits.
Not the Only One
Samsung isn’t the only global company caught in such a dispute in India. Recently, Volkswagen also took legal action against a massive $1.4 billion tax demand for a similar issue related to how parts were imported.
As of now, neither Samsung, Reliance, nor the Indian tax department have responded to media queries about the case.
