India Customs Officials Probe Adani Group on Taxes
May, 21st 2014
Customs officials are investigating whether the ports-and-power giant Adani Group 512599.BY -3.31% avoided paying taxes by inflating the cost of imported machinery, according to a person familiar with the investigation.
India's customs investigator, the Directorate of Revenue Intelligence, sent a show-cause notice Thursday to the company saying it believes some machinery imported by Adani was wrongly valued at 55 billion rupees ($940 million) and that the purchase price was lower. A show-cause notice is an early step in an investigation in which authorities ask a company to provide an explanation for the authorities' findings.
Gujarat-based Adani Group, India's largest private power generator and its largest ports operator, denied any wrongdoing. "We have received the show cause notice from DRI. We are evaluating the same and would decide further course of action based on legal advice," said an Adani Group spokesman.
The notice was sent to three of the Adani's Group's power-generating subsidiaries, according to the person familiar with the investigation. Customs investigators allege in the show-cause notice that an Adani overseas subsidiary bought equipment from overseas suppliers and then sold it at a higher price to the company in India, according the person familiar with the probe.