Delhi High Court restores Samsung’s plea against ₹1,213-crore tax demand
- The Income Tax Appellate Tribunal had dismissed the company’s plea to stay a ₹1,213 crore tax demand for the assessment year 2021-22.
In a reprieve for Samsung India, the Delhi High Court on Monday overturned an order by the Income Tax Appellate Tribunal (ITAT) that had dismissed the company’s plea to stay a ₹1,213 crore tax demand for the assessment year 2021-22. A division of South Korean electronics giant Samsung Electronics Co Ltd, Samsung India had sought relief from the tribunal’s earlier decision.
A bench comprising Justice Vibhu Bakhru and Justice Swarna Kanta Sharma restored Samsung’s stay application and directed the ITAT to decide the matter expeditiously on its merits.
The ITAT had rejected Samsung’s plea on 22 November, calling it “premature.” The tribunal argued that Samsung had not demonstrated any immediate recovery actions initiated by tax authorities at the time of filing or hearing the application. Citing the absence of an imminent threat, the ITAT dismissed the company’s request.
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This prompted Samsung to escalate the matter to the Delhi High Court, which ruled in its favour, setting aside the tribunal’s decision.
"This is a welcome ruling as taxpayers have been facing uncertainty as their bank accounts can be attached through recovery proceedings by the tax department, anytime by giving just a few days notice. So even though, the department hasn't taken any coercive measure the fact that the demand is outstanding, taxpayers can, as a pre-emptive measure, get a stay and would not have to worry about running to the courts when the department takes action." said Amit Maheshwari, partner, AKM Global, a firm specializing in tax and consulting.
Samsung India has a history of tax disputes with Indian authorities. In 2023, the Directorate of Revenue Intelligence (DRI) issued the company a show-cause notice, alleging customs duty evasion amounting to ₹1,728 crore (approximately $212 million). According to the DRI, Samsung misclassified remote radio heads, a type of networking equipment, to claim undue exemptions from basic customs duties.
Beyond tax issues, Samsung is dealing with operational disruptions at its Chennai factory, where workers have been on strike for three consecutive days. The labour unrest has affected the production of televisions, refrigerators, and washing machines, adding to the company’s challenges.
Samsung’s challenges also extend to its position in India’s smartphone market. Once the market leader, the company has now fallen to third place in volume terms, trailing Chinese competitors Vivo and Xiaomi. Research firms Counterpoint and Canalys estimate Samsung’s market share for the April-June quarter at 18% and 17%, respectively, compared to Xiaomi and Vivo, which each hold around 19%.
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First Published:2 Dec 2024, 02:49 PM IST
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