Xiaomi Technologies in major soup as three more agencies keep hawk-eye on its murky deals

Xiaomi Technologies has been served with notices of all sorts of nature from tax evasion to illegal money transfers to China in the name of Patent Fee. But the troubles for the Chinese major do not seem to end here. Close on the heels of Income Tax Department and Department of Revenue Intelligence (DRI), three more government bodies are keeping strict vigil on the murky financial deals of the company.

Sources say that the Enforcement Department (ED), Department of GST and Competition Commission of India (CCI) are keeping a close watch on the movements of both the IT Department as well as the DRI and these three agencies could step into the investigations very soon, making matters worse for the already troubled Chinese company.

IT Department had issued a demand of ₹653 crore to Xiaomi Technology India Pvt. Ltd. for alleged violation of Customs Act saying the company did not include royalty and licence fee in the value of its imports.

Finance ministry said in a statement on Wednesday that by not adding “royalty and licence fee” into the transaction value, Xiaomi India was allegedly evading Customs duty as the beneficial owner of such imported mobile phones and parts. The investigation was carried out by the Directorate of Revenue Intelligence (DRI).

“After completion of the investigation by the DRI, three show-cause notices have been issued to Xiaomi Technology India Pvt. Ltd. for demand and recovery of duty amounting to Rs. 653 crore for the period 1 April 2017 to 30 June 2020, under the provisions of the Customs Act, 1962,” the ministry said in the statement.

During the investigation, searches were conducted by the DRI at the premises of Xiaomi India, which led to the recovery of incriminating documents indicating that Xiaomi India was remitting royalty and licence fee to Qualcomm USA and to Beijing Xiaomi Mobile Software Co. Ltd., a related party, under contractual obligation, the ministry statement alleged.