India Demands Pernod Ricard Pay $244 Million Over Allegedly Neglected Import Taxes
Dated June 27, the notice from India’s customs authority relates to liquor concentrates imported from UK-based Chivas Brothers, a Pernod subsidiary.
According to the notice, import bills for 2009-10 to 2020-21 revealed that liquor concentrates had been undervalued by Pernod Ricard India in its declarations, resulting in lower import duty payments.
The notice said the company apparently owed an additional duty of 20.1 billion rupees ($244 million), plus interest, for imports up to 2020.
“There are ample reasons to doubt the truth or accuracy of the value declared in relation to the imported goods,” the 27-page notice said. “It appears that the import price has been decided in such a manner as to maximise profits accruable to holding companies… The aspect of undervaluation has been taken care of by way of payment of hefty amounts as dividends to the ultimate holding company.”
Pernod Ricard India said in a statement it was working on “asserting and demonstrating its position to the Indian authorities.”
When queried by Reuters, neither Chivas Brothers nor a Pernod spokesperson in France responded. India’s finance ministry — which oversees the tax departments — also did not respond when asked to comment.
Pernod wasn’t following “arm’s length” principles, the notice stated, which ensures all cross-border transactions between group companies are valued as if the transaction was with an unrelated company.
For bills from 2021, the notice also asked Pernod to increase the invoice values of different malt concentrates that it imports by 67.49%.
The $244 million tax demand has been reportedly challenged by Pernod and an Indian court will hear the case on Tuesday.
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