Laptop companies under scanner for alleged tax evasion: Sources

Experts feel such moves often baffle the industry but catching the evadors should be done in a way that genuine players are not harmed.

“The ongoing probe by DRI and DGGI being conducted in the case of laptop companies could unearth potential tax evasion which the company under scanner might have resorted to by way of undervaluation of imported goods or deliberate mis-declaration in the bill of entry to short pay custom duty chargeable thereon.”

“Interestingly, though GST evasion is not a scheduled offence under PMLA, the tax evasion probe could pave way for more stringent Anti-money laundering proceedings as Section 135 of Customs Act is a scheduled offence under PMLA,” said Amit Maheshwari, Partner at AKM Global, a tax and consulting firm.

It is also considered that such investigation could have an impact on FTAs too.

Anita Rastogi, Indirect tax partner at PWC said, "FTA benefits allow imports into India at concessional/ exempt rates. They are subject to various conditions including imports from specified countries where such products are manufactured or undergo a defined level of value addition. The onus is on the importer to prove that they have met the conditions imposed under the FTA notifications.”

“The importers taking benefit of the FTA notifications issued under the Indian Customs Act would be required to provide all the necessary evidence ( such as proof of country of origin, minimum value addition etc.)to the investigation agencies. The government has a lot of focus on bilateral FTA agreements and is in talks with various countries to implement the same. It would be interesting to see the impact of such investigations on FTAs which are under negotiations with other countries. The government is also considering issuance of licenses for import of laptops in India.”

“The customs authorities can have apprehension as most of these imports are between related parties and hence valuation will be the moot aspect to determine the actual duty applicable. In several cases of imports, there have been additions with respect to post importation costs such as marketing costs,” explained Abhishek A Rastogi, who argued in the past before Bombay High Court and Supreme Court for importers to justify the value declared by the importers as the right value.

“The dispute occurs several time on the aspect whether the expenses incurred must be added to the valuation and the concept of ‘condition of sale’ comes into debate while addressing the valuation issues,” added Abhishek Rastogi elaborating on the experience of such a matter before the Apex Court which granted the benefit to the Indian importer.