Samsung Electronics has formally petitioned India’s Customs, Excise and Service Tax Appellate Tribunal (CESTAT) to overturn a \$520 million tax demand, arguing that New Delhi’s own records show similar import practices by Reliance Industries went unchallenged. By invoking the precedent set by Mukesh Ambani’s Reliance Jio unit, Samsung aims to highlight inconsistencies in the government’s enforcement of 10–20 percent import duties on critical telecom components.
In its 281-page appeal filed on April 17, Samsung’s India arm contends that tax officials were “fully aware” of the classification method it used to import Remote Radio Head (RRH) modules—key radio-frequency units for 4G and 5G base stations. Between 2018 and 2021, Samsung imported RRH equipment valued at approximately \$784 million from South Korea and Vietnam. By classifying these modules under a tariff code that carried lower duties, Samsung saved tens of millions in import levies, the company acknowledges, but insists its approach mirrored Reliance’s long-standing practice.
“Reliance Jio officials did not inform Samsung of a 2017 advisory warning their unit over the classification, nor did authorities ever question Samsung’s imports during subsequent years,” the filing asserts. The document cites internal government correspondence indicating that Reliance enjoyed unrestricted use of the same tariff code for three years until mid-2017, when tax authorities finally issued a “clarification.” Samsung says it only discovered this history during the broader investigation that led to the January demand.
Tax Demand and Fines Reach \$601 Million
Indian customs officials first slapped Samsung with the \$520 million demand in January, accusing the company of deliberately underpaying duties and “transgressing all business ethics” to maximize profits. In tandem, authorities imposed personal fines totaling \$81 million on seven current and former Samsung employees, pushing the aggregate liability to \$601 million—more than half of Samsung India’s \$955 million net profit in the 2024 fiscal year.
While Samsung’s appeal focuses on quashing the principal demand, it remains unclear whether the employees will mount separate legal challenges against their individual penalties. Legal experts note that CESTAT hearings can span several months, during which Samsung is likely to lodge interim applications to stay any enforced payments and fines.
Samsung’s argument rests on two pillars: first, that it adopted a classification expressly permitted to—and effectively endorsed for—Reliance Jio; second, that authorities failed to provide Samsung with a “fair opportunity” to present its case before issuing a “hasty” show-cause notice just weeks after initiating the probe.
“This appeal is not merely about a disputed classification; it confronts the fairness of the entire process,” said a Mumbai-based tax lawyer who declined to be named. “By highlighting the Reliance precedent, Samsung is asserting that it was unfairly singled out after years of identical practice by a marquee local player.”
Industry insiders point out that Reliance’s 2017 import advisory predates the entry of many foreign telecom equipment suppliers into India, suggesting the government viewed the RRH classification as settled until broader tariff policy changes in recent years. Samsung’s filing contends that, had it been informed of any irregularity, it would have engaged in early dialogue with tax authorities to seek clarity and avoid penalties.
A Second Major Corporate Dispute in Recent Months
Samsung joins a growing roster of multinational firms contesting large tax demands in India. Earlier this year, Volkswagen AG filed suit against the Indian government over a record \$1.4 billion demand tied to misclassification of imported auto parts. Both cases have elevated concerns among foreign investors about the certainty of India’s indirect tax regime, as New Delhi aggressively pursues past underpayments to bolster revenues.
“With record-setting demands from customs, foreign companies are increasingly wary of retrospective tariff claims,” said Arjun Venkatesh, chief economist at a Mumbai consultancy. “The Samsung and Volkswagen disputes underscore the need for transparent processes and timely clarifications on classification—especially in sectors like telecom and automotive, where high-value components are routinely imported.”
Samsung Electronics commands a leading share of India’s smartphone market and operates multiple manufacturing and R\&D facilities across the country. The \$601 million demand equates to roughly 4 percent of the \$14 billion in revenue generated by its India unit in the last fiscal year, making it a material risk for the world’s largest mobile phone maker by volume.
Despite the large sum at stake, Samsung has continued to invest heavily in India, doubling down on “Make in India” initiatives that supply both domestic and export markets. The company’s filing underscores this commitment, arguing that punitive tax assessments threaten to undermine confidence among international manufacturers considering local production.
Government Response and Next Steps
Indian customs authorities have declined to comment on the ongoing litigation, citing “sub-judice” proceedings. However, a senior official at the Central Board of Indirect Taxes and Customs, speaking on condition of anonymity, stated that the government is confident in the merits of its case and prepared to defend the demand at CESTAT.
CESTAT will schedule a preliminary hearing in the coming weeks, during which Samsung’s stay applications will be heard. If the tribunal rejects the stay, Samsung may be compelled to deposit a portion of the tax demand before pursuing its appeal—a scenario the company is keen to avoid.
Legal observers expect the case to hinge on documentary evidence of the 2017 advisory issued to Reliance, along with internal communications between Samsung and local tax officials. Should Samsung secure victory, it could not only recoup hundreds of millions in contested duties but also set a vital precedent for tariff classification consistency in India.
The tribunal’s ruling, anticipated in late 2025, will be closely watched by multinational corporations across sectors. A decision in Samsung’s favor may spur other companies to challenge retrospective tax claims, particularly where long-standing government ambiguity has persisted. Conversely, an adverse ruling could embolden Indian authorities to pursue additional high-value demands, raising the prospect of further litigation.
For Reliance, the case offers a fresh spotlight on its own tariff practices—historically overlooked despite the conglomerate’s vast import volumes. While the 2017 advisory remains under wraps, competitors and analysts are likely to scrutinize whether Ambani’s telecom arm received preferential treatment, potentially prompting calls for a broader review of tax administration.
As Samsung prepares its legal arguments, the company continues to emphasize collaboration with Indian regulators. In its appeal, Samsung urges CESTAT to endorse a “level playing field” approach, ensuring that all importers—whether local champions or global giants—are held to the same standards. With \$520 million hanging in the balance, the tribunal’s verdict will carry significant weight for India’s ambitions as a manufacturing hub and its reputation among foreign investors.
(Source:www.livemint.com)
In its 281-page appeal filed on April 17, Samsung’s India arm contends that tax officials were “fully aware” of the classification method it used to import Remote Radio Head (RRH) modules—key radio-frequency units for 4G and 5G base stations. Between 2018 and 2021, Samsung imported RRH equipment valued at approximately \$784 million from South Korea and Vietnam. By classifying these modules under a tariff code that carried lower duties, Samsung saved tens of millions in import levies, the company acknowledges, but insists its approach mirrored Reliance’s long-standing practice.
“Reliance Jio officials did not inform Samsung of a 2017 advisory warning their unit over the classification, nor did authorities ever question Samsung’s imports during subsequent years,” the filing asserts. The document cites internal government correspondence indicating that Reliance enjoyed unrestricted use of the same tariff code for three years until mid-2017, when tax authorities finally issued a “clarification.” Samsung says it only discovered this history during the broader investigation that led to the January demand.
Tax Demand and Fines Reach \$601 Million
Indian customs officials first slapped Samsung with the \$520 million demand in January, accusing the company of deliberately underpaying duties and “transgressing all business ethics” to maximize profits. In tandem, authorities imposed personal fines totaling \$81 million on seven current and former Samsung employees, pushing the aggregate liability to \$601 million—more than half of Samsung India’s \$955 million net profit in the 2024 fiscal year.
While Samsung’s appeal focuses on quashing the principal demand, it remains unclear whether the employees will mount separate legal challenges against their individual penalties. Legal experts note that CESTAT hearings can span several months, during which Samsung is likely to lodge interim applications to stay any enforced payments and fines.
Samsung’s argument rests on two pillars: first, that it adopted a classification expressly permitted to—and effectively endorsed for—Reliance Jio; second, that authorities failed to provide Samsung with a “fair opportunity” to present its case before issuing a “hasty” show-cause notice just weeks after initiating the probe.
“This appeal is not merely about a disputed classification; it confronts the fairness of the entire process,” said a Mumbai-based tax lawyer who declined to be named. “By highlighting the Reliance precedent, Samsung is asserting that it was unfairly singled out after years of identical practice by a marquee local player.”
Industry insiders point out that Reliance’s 2017 import advisory predates the entry of many foreign telecom equipment suppliers into India, suggesting the government viewed the RRH classification as settled until broader tariff policy changes in recent years. Samsung’s filing contends that, had it been informed of any irregularity, it would have engaged in early dialogue with tax authorities to seek clarity and avoid penalties.
A Second Major Corporate Dispute in Recent Months
Samsung joins a growing roster of multinational firms contesting large tax demands in India. Earlier this year, Volkswagen AG filed suit against the Indian government over a record \$1.4 billion demand tied to misclassification of imported auto parts. Both cases have elevated concerns among foreign investors about the certainty of India’s indirect tax regime, as New Delhi aggressively pursues past underpayments to bolster revenues.
“With record-setting demands from customs, foreign companies are increasingly wary of retrospective tariff claims,” said Arjun Venkatesh, chief economist at a Mumbai consultancy. “The Samsung and Volkswagen disputes underscore the need for transparent processes and timely clarifications on classification—especially in sectors like telecom and automotive, where high-value components are routinely imported.”
Samsung Electronics commands a leading share of India’s smartphone market and operates multiple manufacturing and R\&D facilities across the country. The \$601 million demand equates to roughly 4 percent of the \$14 billion in revenue generated by its India unit in the last fiscal year, making it a material risk for the world’s largest mobile phone maker by volume.
Despite the large sum at stake, Samsung has continued to invest heavily in India, doubling down on “Make in India” initiatives that supply both domestic and export markets. The company’s filing underscores this commitment, arguing that punitive tax assessments threaten to undermine confidence among international manufacturers considering local production.
Government Response and Next Steps
Indian customs authorities have declined to comment on the ongoing litigation, citing “sub-judice” proceedings. However, a senior official at the Central Board of Indirect Taxes and Customs, speaking on condition of anonymity, stated that the government is confident in the merits of its case and prepared to defend the demand at CESTAT.
CESTAT will schedule a preliminary hearing in the coming weeks, during which Samsung’s stay applications will be heard. If the tribunal rejects the stay, Samsung may be compelled to deposit a portion of the tax demand before pursuing its appeal—a scenario the company is keen to avoid.
Legal observers expect the case to hinge on documentary evidence of the 2017 advisory issued to Reliance, along with internal communications between Samsung and local tax officials. Should Samsung secure victory, it could not only recoup hundreds of millions in contested duties but also set a vital precedent for tariff classification consistency in India.
The tribunal’s ruling, anticipated in late 2025, will be closely watched by multinational corporations across sectors. A decision in Samsung’s favor may spur other companies to challenge retrospective tax claims, particularly where long-standing government ambiguity has persisted. Conversely, an adverse ruling could embolden Indian authorities to pursue additional high-value demands, raising the prospect of further litigation.
For Reliance, the case offers a fresh spotlight on its own tariff practices—historically overlooked despite the conglomerate’s vast import volumes. While the 2017 advisory remains under wraps, competitors and analysts are likely to scrutinize whether Ambani’s telecom arm received preferential treatment, potentially prompting calls for a broader review of tax administration.
As Samsung prepares its legal arguments, the company continues to emphasize collaboration with Indian regulators. In its appeal, Samsung urges CESTAT to endorse a “level playing field” approach, ensuring that all importers—whether local champions or global giants—are held to the same standards. With \$520 million hanging in the balance, the tribunal’s verdict will carry significant weight for India’s ambitions as a manufacturing hub and its reputation among foreign investors.
(Source:www.livemint.com)
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