Delhi HC Rejects Pernod Ricard Plea; Absolut Vodka and Chivas Regal Ban in Delhi Continues

Apart from the alcohol policy concern, Pernod Ricard is involved in another controversy, namely the one with Indian tax authorities. According to a Reuters report, Indian investigators have concluded that the company deliberately concealed the true age and composition of its Scotch whisky imports.

This was done to understate the actual value of the imported goods and pay lower customs duties. Following this revelation, the French company has been ordered to pay $314 million, or approximately ₹2,996 crore (approximately ₹2,996 crore), in back taxes.

Court documents and investigation reports have revealed that Pernod deliberately concealed its information during the investigation, which concluded in September last year. The company introduced new codenames for internal malt, making it extremely difficult for customs officials to compare these imports with those of competitors.

According to investigators' reports, the company withheld the correct details (exact composition and age) of the imported malt, intending to evade taxes and conceal its true value. However, Pernod India has categorically denied these allegations, stating that it has complied with all regulations and is responding through legal channels.

Understated value by 67.49% to avoid 150% tariff:

• The company is accused of understating the value of its bulk Scotch concentrate imports by 67.49%.
• This significantly reduced the hefty 150% tariff imposed by the Delhi government.
• Famous whiskey brands like Royal Stag are produced by adding water and caramel to this imported concentrate.

India is the world's largest market for Pernod in terms of volume. Before this dispute, Delhi alone accounted for approximately 5% of the company's total Indian sales. Currently, according to court records, the company has a tax liability of approximately ₹3,000 crore.

However, if the company loses this legal battle, the total payment, including penalties, could exceed $600 million, or approximately ₹5,725 crore. This massive sum represents a fifth of the company's last year's Indian revenue (2.9 billion dollars, or approximately ₹27,676 crore) and three times its total profit.

Companies like Pernod Ricard import bulk Scotch concentrate from abroad. This concentrated material is then diluted with a specified amount of water, neutral spirits, and other ingredients like caramel to create popular brands like Royal Stag in India. Import of this concentrate attracts a heavy custom tariff of up to 150% in India.