No end to woes of Chinese companies? Huawei seeks easing of overseas payment curbs

No end to woes of Chinese companies? Huawei seeks easing of overseas payment curbs

Photo: BCCL

New Delhi: There seems to be no end to the troubles faced by Chinese companies in India. A few days after the taxmen alleged that Huawei India transferred money to the parent company in China in the form of dividends reducing taxable income here, it has emerged that the company has knocked on the doors of the Delhi High Court seeking a relaxation in overseas payment restrictions.
Huawei Telecommunications (India) has requested the court to revise its April order preventing it from repatriating money abroad as it cannot pay overseas suppliers. The Chinese smartphone maker is one of the companies facing strict scrutiny in India along with other Chinese tech companies such as Vivo and Xiaomi.

Delhi HC’s April order

The Delhi HC on April 21 had barred the firm from carrying out overseas transactions until the next hearing without its permission. The court had stayed the provisional attachment of Huawei India’s bank accounts and trade receivables of Rs 1,500 crore by the IT department on the same day.

Now, Huawei has once again appealed to the court as it filed a fresh application last week, saying that it’s unable to pay overseas suppliers.

Meanwhile, the IT department, in its affidavit submitted to the court last week, said the company transferred Rs 750 crore to its parent in China even as Indian revenues fell, claiming huge discrepancies in the income declared by Huawei India Telecommunications in the last two years. .

Huawei’s arguments

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 fulfill these orders, he added that Huawei is” not in a position to make any payments to the said overseas suppliers “. because of the high court’s stipulation.

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The company said it “undertakes that neither dividend nor royalty will be repatriated without the leave of court”. The court asked it to file specific details regarding payments to overseas suppliers and issued notices to the IT department asking it to respond to Huawei’s demand within two weeks.

The counsel also argued that 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.

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