Modi’s ‘Sabka Vishwas’ rakes in big success: Cadbury maker pays up hefty sum to settle tax dispute

FE Online


Narendra Modi government's flagship Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 has brought in a windfall to the exchequer, with Cadbury chocolate maker Mondelez India Foods Pvt Ltd settling a long-pending tax dispute by paying up a hefty sum of Rs 439 crore. Confectionery giant Mondelez India (erstwhile Cadbury India) paid Rs 439 crore to the government on January 21 to settle a Rs 580 crore pending tax dispute, The Indian Express reported citing unidentified sources. The authorities had accused the company of evading Rs 580 crore in tax over a non-existent plant in Baddi of Himachal Pradesh. The Ministry of Finance had brought in Sabka Vishwas amnesty scheme in September last year to resolve disputes pertaining to tax evasions. 

Mondelez India Foods have been under the radar of central investigating agencies such as CBI and Central Vigilance Commission for not complying with the tax regime. The firm is under CBI investigation after the agency registered an FIR under the Prevention of Corruption act on CVC's findings that many state and central government officials were bribed to help them evade tax norms. CBI is yet to disclose if it has filed any charge sheet against the firm.

The tax evasion case ran into an investigation by the Directorate General of Central Excise Intelligence in 2011 for allegedly misusing "area-based exemption" for its new unit in Baddi, without coming into existence, to avail benefits. Under the 'area-based exemption' norms, new industrial units of firms in Himachal Pradesh were provided full exemption from excise duties for the production of specified goods for a period of 10 years. The firms should have been established before March 2010.

"We continue to believe that the decision to claim an excise tax benefit in respect of our plant in Baddi was valid. However, the matter dates back to 2010, and it could take several more years to be resolved through the legal process. The Sabka Vishwas Scheme, 2019, introduced by the Indian government in 2019, was an opportunity to settle a potentially protracted litigation. Like other tax payers, Mondelez India chose to take advantage of the amnesty, and we settled several legacy disputes including the Baddi matter," an official spokesperson of the company told The Indian Express.