Samsung Electronics is contesting a $520 million tax demand from Indian authorities, alleging misclassification of imported telecom equipment. The South Korean tech giant argues that Reliance Jio previously employed the classification method without objection from tax officials.
Background of the Dispute
Between 2018 and 2021, Samsung imported Remote Radio Head (RRH) components essential for 4G telecom infrastructure from Korea and Vietnam. Indian tax authorities claim these imports were misclassified to evade 10–20% tariffs, leading to a $520 million tax demand and an additional $81 million in fines for seven Samsung employees, totaling $601 million.
Samsung’s Defense
In a 281-page appeal to the Customs Excise and Service Tax Appellate Tribunal in Mumbai, Samsung contends that:
- Awareness by Authorities: The classification method was known to Indian tax officials, as Reliance Jio used the same for similar imports until 2017.
- Lack of Notification: Samsung was unaware of a 2017 warning issued to Reliance regarding this classification and was not informed by either Reliance or tax authorities.
- Procedural Concerns: The tax order was issued hastily in January 2025, without providing Samsung a fair opportunity to present its case.
Broader Implications
This case is part of a series of tax disputes involving foreign companies in India. Notably, Volkswagen is contesting a $1.4 billion tax demand over similar allegations of misclassifying imports.
Samsung’s challenge underscores concerns about regulatory clarity and consistency in India’s tax enforcement, potentially impacting foreign investment sentiments.
