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Cadbury used unfinished factory to avoid tax: Govt

Discussion in 'National Politics' started by Marqueur, Mar 6, 2013.

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  1. Marqueur

    Marqueur Peaceful Silence ELITE MEMBER

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    NEW DELHI/MUMBAI: Tax authorities in India have accused Cadbury Plc of misleading them about production from a new factory to avoid about $46 million in taxes, a government official said, adding to the chocolate maker's tax woes in the country.

    The case comes as India is aggressively pursuing tax claims against multinationals as it seeks to rein in its budget deficit, with Royal Dutch Shell, Vodafone Plc and LG Electronics Inc among numerous firms involved in disputes.

    Cadbury set up a factory in 2005 in Himachal Pradesh to take advantage of a 10-year "tax holiday" scheme for companies that started production by March 31, 2010, said a senior official at the tax department.

    The company, now part of US snacks firm Mondelez International Inc, in 2009 told authorities it had set up another plant next to the existing one that should be also be exempted from tax until 2019, said the official at the Directorate General of Central Excise Intelligence.

    However, the second plant was not operational as of March 31, 2010, when the tax holiday scheme ended, said the official, who declined to be named as he was not authorised to speak to the media. It began commercial production a couple of months later.

    A report on the Wall Street Journal quoted a former Cadbury executive as saying an expansion of the existing factory had been misrepresented as the construction of a second plant for the tax exemption. The tax official did not comment on the Journal's report.

    Cadbury did not comment on the detail of the allegations, but said it was co-operating with the authorities.

    "We are in the process of reviewing the contents of the show-cause notice from the Excise Department and will respond to it in consultation with our legal advisors," a Cadbury statement said.

    Tax demand notices

    The authorities have now asked Cadbury why it should not pay Rs 2.5 billion in factory-gate taxes for the second plant for the period between May 2010 and January 2013.

    The directorate official said that tax demand notices were sent to Cadbury and its executives on February 28 and the company has been give a month's time to respond.

    If the tax directorate was able to establish that Cadbury's new plant became operational after the tax holiday scheme ended, the company would have to pay taxes, tax consultants said. The company is, however, expected to challenge the notice, they said.

    "Setting up of a factory and commencement of production leave a trail which is undisputable," said the tax practice head at a consultancy in New Delhi, declining to be named as he was not authorised to comment on company disputes.

    "My impression is that the directorate's findings are based on specific facts."

    In a separate case, the income tax department has accused Cadbury's local unit of overpaying its parent company for brand royalty and service fees, thereby lowering its profit in India and resulting in a lower tax bill.

    The company has challenged the ruling for 2007-08 and the local income tax tribunal has granted a stay on the tax demand upon payment of less than 10 percent of the amount.

    Cases involving the internal transfer of goods, services and assets -- known as transfer pricing -- have become a hot area of international tax law as revenue authorities in many countries have challenged companies efforts to minimise tax liabilities.

    Cadbury was acquired by Kraft Foods Inc in 2010 in a $19 billion deal. Kraft then spun off its North American grocery business as Kraft Foods Group.

    Mondelez is the name of what remains of Kraft Foods Inc after the spin-off. Its brands include Oreo cookies and Trident gum.

    Cadbury used unfinished factory to avoid tax: Govt - The Times of India

    look at the mess our Country in !!!! Company like Cadbury is looting n cheating us!!! Shame Shame !!!
     
  2. G777

    G777 Lt. Colonel ELITE MEMBER

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    And its a bad thing to avoid geting taxed??? *troll*
     
  3. Himanshu Pandey

    Himanshu Pandey Don't get mad, get even. STAR MEMBER

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    yes it is bad when it is not us(for us it is mastermind plan to save money from corrupt govt. for multinationals........ you know we are patriot man):smile:
     
  4. Manmohan Yadav

    Manmohan Yadav Brigadier STAR MEMBER

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    behti ganga mein haath dho rahe hain sabhi
     
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