Huawei Telecommunications (India) has urged the Delhi High Court to modify its April order restraining it from repatriating money abroad as it can’t pay overseas suppliers. On April 21, the HC had barred the firm from sending money overseas until the next hearing without its nod. The same day, the HC stayed the provisional attachment of Huawei India‘s bank accounts and trade receivables of ₹1,500 crore by the I-T department.
The company, in a fresh application filed last week, said it’s unable to pay overseas suppliers.
ET was the first to report last week that the I-T department has accused the company of repatriating large amounts to the parent, reducing its taxable income in India.
Alleging discrepancies in the income declared by Huawei Telecommunications India for at least two financial years, the department in its affidavit submitted to the court last week said the company had repatriated ₹750 crore “even when its revenue was reducing drastically”.
Counsel for Huawei said that “in the regular course of business” the company had been receiving orders from customers, primarily Indian telecom service providers, for telecom equipment and services. Customer contracts require the company to import equipment and spare parts from its overseas suppliers, the counsel said. “Orders are placed pursuant to long-term contracts of the firm and that it (Huawei) is under contractual and legal obligation to fulfil these orders,” he said. The firm is “not in a position to make any payments to the said overseas suppliers” because of the high court’s stipulation.
The firm said it “undertakes that neither dividend nor royalty will be repatriated without the leave of court”. The bench asked it to file specific details regarding payments to overseas suppliers and issued notices to the I-T department asking it to respond to Huawei’s demand within two weeks.
At the hearing on April 21, counsel for Huawei India had told the high court that due to the attachment of its bank accounts by the income tax department, the company had defaulted on the payment of statutory dues such as GST and TDS. The company had also said that it had not been able to pay salaries to its 400 permanent employees and 190 contractual staff as well as clear dues of vendors and suppliers. The high court had said the matter required a “detailed examination” and to “balance the equity” it stayed the attachment of bank accounts by the I-T department on five conditions.
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