NEW DELHI, May 4 (Reuters) – Samsung has appealed to an Indian tribunal to overturn a $520 million tax demand over alleged misclassification of imported networking equipment. The company argues that Indian authorities were aware of its import methods, especially since Reliance Jio had used similar practices for years, according to legal documents reviewed by Reuters. This development makes Samsung the second major foreign firm recently to push back against Indias tax claims. Earlier, Volkswagen filed a lawsuit against Prime Minister Narendra Modis administration over a $1.4 billion import tax dispute.

In Samsung’s case, tax officials in January accused the South Korean company of evading 10–20% duties by misclassifying mobile tower components it supplied to Reliance Jio from 2018 to 2021. Samsung’s 281-page filing with the Customs Excise and Service Tax Appellate Tribunal in Mumbai contends that the government was fully aware of the classification method used, which had been previously employed by Reliance without consequence until 2017.

Samsung stated it only learned of a 2017 warning issued to Reliance during a recent tax investigation. The company claims that Reliance never informed them about the warning, and that tax officials never raised concerns about Samsung’s import declarations at the time. The authorities were aware of the classification adopted by Samsung but never objected, the company said in the April 17 filing. Reliance Jio officials also did not communicate the 2017 tax warning to Samsung.

Neither Samsung nor Indian tax authorities responded to Reuters’ inquiries. Details about the 2017 warning to Reliance remain undisclosed. In addition to the $520 million demand, Indian authorities have fined seven Samsung employees a total of $81 million, bringing the overall tax liability to $601 million. It is unclear whether the employees are contesting the penalties. The amount in dispute represents a significant portion of Samsung India’s 2023 net profit of $955 million. In its defense, Samsung also criticized the tax order as being rushed, claiming the company was not given adequate opportunity to explain its position, despite the high financial stakes.

The dispute centers on the classification of a component called the Remote Radio Head — a critical part of 4G telecom infrastructure. Authorities allege that Samsung deliberately misclassified $784 million worth of these imports from Korea and Vietnam between 2018 and 2021 to boost profits. The January tax order accused Samsung of violating ethical and industry standards, stating the company prioritized profit over compliance by defrauding the government treasury.

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