SABMiller Appeals India Tax Demand Of INR1.83 Billion, Moves Court
May 12 2011 - 3:25AM
Dow Jones News
SABMiller PLC (SBMRY) has appealed a INR1.83 billion ($40.84
million) tax notice from India related to a 2006 acquisition and
filed lawsuits challenging the demand, joining another British
company, Vodafone Group PLC (VOD.LN), in fighting tax claims
related to buying of assets in India from companies based
abroad.
London-based SABMiller, the world's second-biggest brewer by
volume after Anheuser-Busch InBev NV (ABI.BT), bought rival
Foster's Group Ltd.'s (FBRWY) Indian business for $120 million in
2006. Local authorities said SABMiller should have withheld tax on
behalf of the tax department while paying the seller.
The demand includes taxes and interest, a senior tax department
official told Dow Jones Newswires, asking not to be named.
In an emailed statement, SABMiller said the notice is for A$39.5
million.
"SABMiller has applied for rectification of the order passed by
the tax officer. It has also lodged two writ petitions before the
Bombay High Court," challenging the jurisdiction of the tax
authorities and the demand notice, SABMiller said. The court has
granted a stay until it hears the petition again in June, the
company added.
The tax claim is subject to an indemnity granted by Foster's to
SABMiller, the British brewer said.
Foster's Group said it is confident of the position it took over
tax in India and will "vigorously defend" its case in Indian
courts.
In an email to Dow Jones Newswires, Foster's didn't explain why
it doesn't have to pay tax in India, but said any liability related
to the tax claim will remain with Foster's.
Vodafone has been fighting a battle against local authorities
over the tax demand related its 2007 buy of a 67% stake in Indian
mobile services provider Hutchison Essar Ltd. from Hong Kong's
Hutchison Whampoa Ltd. (0013.HK) for $11.2 billion.
Local authorities have asked Vodafone to pay $2.6 billion in
taxes and interest on behalf of Hutchison. Vodafone has contested
the demand, saying it doesn't have to pay tax in India as the deal
was between two foreign-registered entities outside the
country.
The case is currently before the Supreme Court of India.
-By Kenan Machado, Dow Jones Newswires; +91 22 6145 6107;
kenan.machado@dowjones.com
--Prasanta Sahu in New Delhi contributed to this article
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