Tech giant IBM has reportedly come under the scanner of the Directorate of Revenue Intelligence (DRI) for allegedly not paying Rs 620 crore customs duties for equipment imported into the country, the Economic Times reported citing three people aware with the matter. The DRI has sent a notice to the technology behemoth, asking it to pay the amount.
According to the report, the DRI, which started examining the suspected under-invoicing of equipment in 2014, issued notices to IBM last week. The agency has also sent two additional notices, which could raise the total dues to Rs 900 crore, the financial daily mentioned citing two people in the know.
In its 200-page notice for Rs 620 crore details, the DRI mentioned it as omissions by the US-based company. The DRI notice allegedly highlighted that the technology major did not pay custom duties on operating software sold along with the hardware, as well as duty on the warranty given its equipment, the report said.
The company had received a notice from DRI for payment of dues amounting to Rs 620 crore, an IBM executive told ET on condition of anonymity. He did not confirm anything about the other two notices.
A spokesperson for the company told the publication that IBM is “committed to the highest ethical standards and to compliance with applicable laws and regulations in the conduct of its business”.
Tax experts are of the opinion that the reason for the DRI notices could be rather as simple as the firm recording imports and exports under one entry for duty, while the customs department may be putting them under different categories, as per the report.
“There could be disagreement between tax authorities and IBM in the way they treat imports and exports,” a Bengaluru-based tax expert, who did not wish to be named, told ET.
Amit Maheshwari, partner, Ashok Maheshwary & Associates LLP, told the daily: “They (DRI) can say that you have underpriced your equipment by not considering the royalty, technical services or other similar payments to evade customs duty. But it depends on the facts (of the case).”