India: SABMiller appeals 1.83 bln rupees tax notice related to Foster’s Indian unit acquisition in 2006

SABMiller has appealed a tax notice of 1.83 billion rupees ($42 million) from India related to an acquisition in 2006, and has filed lawsuits challenging the demand, The Wall Street Journal reported on May, 12.

SABMiller joins another British company, Vodafone Group PLC, in fighting tax claims related to buying of assets in India by companies based elsewhere.

London-based SABMiller, the world's second-biggest brewer by volume after AB InBev NV, bought rival Foster's Group's 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, said a senior tax department official who didn't want to be named.

SABMiller said the notice is for A$39.5 million, in an e-mailed response.

"SABMiller has applied for rectification of the order passed by the tax officer," the company said, adding "it has also lodged two writ petitions before the Bombay High Court" that challenges the jurisdiction of the tax authorities and the demand notice. The court has granted a stay until it hears the petition again in June.

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.

The company, in an e-mail response, 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 it.

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 from Hong Kong's Hutchison Whampoa 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.

13 May, 2011