Hindustan Unilever on August 27 said that it has received a tax notice of Rs 962.75 crore, including an interest of Rs 329.33 crore, the FMCG major announced in an exchange filing.
The company said the demand has been issued for the non-deduction of tax deducted at source for a remittance of Rs 3,045 crore for the payment towards the purchase of India Health Food Drink (HFD) Intellectual Property Rights (IPR) from GlaxoSmithKline ‘GSK’ Group entities.
The markets reacted marginally to the development as the HUL stock slipped 0.19 percent to Rs 2,815.85 on NSE at 10:10 am.
The payment was made for the merger of GSK’s India brands with HUL, including Horlicks, Boost, Maltova, and Viva.
The company said the demand will not have any significant financial implications at this stage.
“The company has strong case on merits on tax not withheld, basis available judicial precedents, which have held that the situs of an intangible asset is linked to the situs of the owner of the intangible asset and hence, income arising on sale of such intangible assets are not subject to tax in India,” the company statement said.
The firm will appeal the I-T department's order, which was issued on August 23, the statement said. Moreover, HUL has an indemnification right to recover the demand raised by the tax department and will undertake necessary steps in furtherance of the same, the firm said.
On April 1 2020, HUL completed the merger of GSK Consumer Healthcare with itself, and acquired Horlicks brand for India from GSK for Rs 3,045 crore. Other brands which were under the ownership of GSK Consumer like Boost, Maltova and Viva came to HUL's brand portfolio by virtue of the merger.
In December 2018, Unilever had struck a deal to buy GSK's Horlicks nutrition business, boosting the Anglo-Dutch group's position in India.
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