Samsung challenges $520 million Indian tax demand, cites Reliance’s similar import practices

Samsung has filed a legal challenge against a $520 million tax demand issued by Indian authorities over the alleged misclassification of telecom equipment imports.

The South Korean tech giant argues that Indian officials were aware of the classification practice for years, particularly as telecom giant Reliance Jio had previously imported the same component in a similar fashion without paying tariffs.

The dispute centers on imports of the "Remote Radio Head" - a key component used in 4G mobile towers - that Samsung brought into India between 2018 and 2021 from South Korea and Vietnam. Authorities allege that Samsung intentionally misclassified these imports to avoid 10–20% tariffs, boosting its profit margins.

In its 281-page appeal to the Customs, Excise and Service Tax Appellate Tribunal in Mumbai, Samsung claims the tax department was “fully aware” of the classification method but never raised objections. The company also disclosed that Reliance had used the same import classification method for three years until 2017, and that tax officials had issued a warning to Reliance back then - a warning that Samsung says was never shared with them.

"Reliance Jio officials did not inform" Samsung of the 2017 tax warning, the company stated in its April 17 filing. It also criticised the January tax order as rushed and claimed that it was not given a fair chance to present its defense, especially given the scale of the financial stakes involved.

The case adds to a growing list of tax disputes between foreign firms and Indian authorities. Recently, Volkswagen also sued the Indian government over a $1.4 billion tax demand for similar alleged misclassification of imports.

In addition to the $520 million tax demand, Indian authorities have levied an $81 million penalty on seven Samsung employees, bringing the total to $601 million - more than half of Samsung India’s $955 million net profit from last year. It remains unclear whether the employees are pursuing separate legal challenges.

Indian investigators have accused Samsung of prioritising profit over compliance, claiming in their January order that the company “transgressed all business ethics” in its import practices.

Both Samsung and the Indian tax authority declined to comment, while Reliance has yet to respond to questions regarding its role in the case.