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Samsung faces big tax challenge in key Indian market

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Seven execs challenge penalty in case, source, document

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Executives argue India rushed to deliver order, source

says

By Arpan Chaturvedi

NEW DELHI, May 28 (Reuters) - Seven Samsung India

executives have asked a court to revoke penalties of $81 million

included in New Delhi's $601-million tax demand from the company

for allegedly misclassifying some imports, arguing "no grave

offence" had been committed, according to legal papers and a

source.

The Indian tax authority in January found Samsung and its

executives evaded tariffs by misclassifying imports of key

mobile tower equipment from 2018 to 2021. Samsung has separately

challenged the order before a tax appeals tribunal, where it has

defended its declarations and denied any wrongdoing.

While Samsung's India unit faced a $520 million demand,

employees were asked to pay penalties totaling $81 million for

"knowingly and intentionally" playing a role in the

misclassification of imports.

In a High Court filing in Mumbai which was not made public

but was seen by Reuters, Samsung India logistics executive Ravi

Chadha said the authorities issued the penalty within two to

three days of receiving hundreds of pages of detailed responses

from the company and its executives in January, and the process

was "rushed".

"This timeframe is utterly insufficient to conduct the

requisite in-depth study," read the filing by Chadha, who faces

a fine of 950 million rupees ($11.1 million).

"The present case is limited to the interpretation of tariff

entries, no grave offence has been committed."

Samsung India and Chadha did not respond to Reuters queries.

India's tax authority did not respond immediately to requests

for comment.

Online court records show the six other executives including

the network division's vice president, Sung Beam Hong, a general

manager for finance, Sheetal Jain, and Samsung's general manager

for indirect taxes, Nikhil Aggarwal, have also challenged the

tax authority's order.

The lawyer for all seven executives, Sriram Sridharan of

Indian law firm Lakshmikumaran & Sridharan, did not immediately

respond to a request for comment. The law firm also represents

Samsung in the tax appeals tribunal challenge.

Their pleas and grounds for revoking the penalty are

identical to Chadha's, said a source with direct knowledge of

the ongoing lawsuits.

In his court filing, Chadha argued that the "egregiously

exorbitant" penalty is impossible for any salaried employee to

bear, and it would take him more than 100 years to settle the

amount given his earnings.

(Reporting by Arpan Chaturvedi; Editing by Aditya Kalra and

Emelia Sithole-Matarise)