Confectionary giant Cadbury was yesterday faced with Rs5.5bn (a near £60m) tax bill in India, due to allegations that the Dairy Milk chocolate maker claimed excise benefits on a “phantom” factory.
India’s tax authorities cite that Cadbury, owned by food and beverage conglomerate Mondelez International, gave inaccurate information when claiming an excise tax exemption connected with a factory in Himachal Pradesh in North India. Cadbury is disputing the bill.
Cadbury, the world’s second largest confectionary brand, completed an expansion of the plant in 2009 and now India’s authorities assert the development was suggested as a new facility (and so eligible for a tax exemption), as opposed to an extension of an older factory.
This led to allegations from several media outlets in India who accused Cadbury of seeking tax benefits for a factory that did not actually exist. Cadbury denied any misconduct and is prepared to challenge the decision in court.
“The issue is one of interpretation, and it will be inappropriate on our part to discuss the details externally at this time since the matter is sub-judice and in the legal domain,” said the brand in a statement.
The company is examining the order and will challenge the same in appeal, as we firmly believe that we have correctly claimed exemption of excise duty. We also firmly believe that our executives acted in good faith and within the law in the decision to claim excise benefit in respect of our plant.”
India has been under pressure to reduce its budget deficit of late, attempting to boost fiscal revenue by pursuing billions of dollars in unpaid tax claims against large multinationals such as Vodafone.