The Tribune, Chandigarh, India

	Cadbury India used ‘phantom factory’ to avoid taxes: Govt Slapped with Rs 250 crore notice for excise evasion New Delhi/Mumbai, March 6 Tax authorities in India have accused Cadbury Plc of misleading them about production from a new factory to avoid about $46 million in taxes, a government official said, adding to the chocolate maker's tax woes in the country. The case comes as India is aggressively pursuing tax claims against multinationals as it seeks to rein in its budget deficit, with Royal Dutch Shell, Vodafone Plc and LG Electronics Inc among numerous firms involved in disputes. Cadbury set up a factory in 2005 in Himachal Pradesh to take advantage of a 10-year "tax holiday" scheme for companies that started production by March 31, 2010, said a senior official at the tax department. The company, now part of US snacks firm Mondelez International Inc, in 2009 told authorities it had set up another plant next to the existing one that should be also be exempted from tax until 2019, said the official at the Directorate General of Central Excise Intelligence. However, the second plant was not operational as of March 31, 2010, when the tax holiday scheme ended, said the official, who declined to be named as he was not authorised to speak to the media. It begin commercial production a couple of months later. A report on the Wall Street Journal quoted a former Cadbury executive as saying an expansion of the existing factory had been misrepresented as the construction of a second plant for the tax exemption. The tax official did not comment on the Journal's report. Cadbury did not comment on the detail of the allegations, but said it was co-operating with the authorities. "We are in the process of reviewing the contents of the show cause notice from the excise department and will respond to it in consultation with our legal advisors," a Cadbury statement said. TAX DEMAND NOTICES: The authorities have now asked Cadbury why it should not pay 2.5 billion rupees in factory-gate taxes for the second plant for the period between May 2010 and January 2013. The directorate official said that tax demand notices were sent to Cadbury and its executives on February 28 and the company has been give a month's time to respond. If the tax directorate was able to establish that Cadbury's new plant became operational after the tax holiday scheme ended, the company would have to pay taxes, tax consultants said. The company is, however expected to challenge the notice, they said. "Setting up of a factory and commencement of production leave a trail which is undisputable," said the tax practice head at a consultancy in New Delhi, declining to be named as he was not authorised to comment on company disputes. "My impression is that the directorate's findings are based on specific facts." In a separate case, the income tax department has accused Cadbury's local unit of overpaying its parent company for brand royalty and service fees, thereby lowering its profit in India and resulting in a lower tax bill. The company has challenged the ruling for 2007-08 and the local income tax tribunal has granted a stay on the tax demand upon payment of less than 10% of the amount. Cases involving the internal transfer of goods, services and assets — known as transfer pricing — have become a hot area of international tax law as revenue authorities in many countries have challenged companies efforts to minimize tax liabilities. Cadbury was acquired by Kraft Foods Inc in 2010 in a $19 billion deal. Kraft then spun off its North American grocery business as Kraft Foods Group. Mondelez is the name of what remains of Kraft Foods Inc after the spinoff. Its brands include Oreo cookies and Trident gum. — Reuters
	In a first, EU fines Microsoft $733 m for browser deal breach Amsterdam, March 6 The European Union Commission has fined Microsoft 561 million euro (US $733 million) for breaking the terms of an earlier agreement to offer users a choice of internet browser. The penalty is a first for Brussels — no company has ever failed to keep its end of a bargain with EU authorities before. In 2009, Microsoft agreed to pay a 860 million euro fine and promised to give Windows users the option of choosing another browser rather than having Internet Explorer automatically installed. But Microsoft failed to stick to the deal for some 15 million installations of Windows 7 in Europe from May 2011 until July 2012. The company admitted the failure last year, adding that it was a mistake. The EU Commission's top regulator, Joaquin Almunia, said at a press conference in Brussels, Belgium Wednesday that negotiated settlements are vital for enforcement to be carried out quickly. But he warned that the whole point would be undermined if companies then don't abide by the terms of the settlement. "They must do what they committed to do, or face the consequences," he said. Almunia added that the large fine took into account the size and length of time the company violated the terms of its agreement, as well as the need to defer other companies from backsliding on their promises to competition authorities. He said the fine was less than it might have been because Microsoft had cooperated with the investigation. A Microsoft spokesman said the company would respond later Wednesday. In all, the company has now paid a grand total of 2.2 billion euros in fines to the commission since it began its first investigation into the company's abuse of market power linked to its dominant Windows operating systems, in 1998. — AP
	Govt to prioritise wheat exports to grapple with grain mountain New Delhi/Mumbai, March 6 The government will do everything it can to push record volumes of wheat onto the global market to cut massive stocks, a senior farm ministry official said on Wednesday, in a move that could hit shipments of other grains using rail and congested ports. The world's No. 2 wheat producer is expecting another bumper harvest to start rolling in within weeks but lacks the warehouses needed to weatherproof a grain mountain that is big enough could feed its 500 million poor for a year. It could decide to allow another five million tonnes of wheat exports as early as Thursday, government sources have said — more than doubling the sales already approved to about 9.5 million tonnes. The surge of supply on top of better harvests expected from Australia, the United States and the Black Sea, would put further pressure on global prices. Benchmark Chicago wheat prices fell to an eight-month low last week on a better outlook for the US crop. "Wheat exports are a priority issue as the new harvest is about to begin later in the month," said the farm ministry official, who declined to be named as he was not authorized to speak to the media. Shifting such huge volumes in India — a third of what top exporter the United States ships in a year —would put a big strain on limited rail and port capacity and hit private exports. The wheat harvest starts arriving later this month and picks up during April. By June, total grains stocks will hit a record 100 million tonnes, with only half of that finding room in silos safe from the drenching June to September monsoon rains. "India has a golden opportunity, at least for the next few months," said Sanjeev Garg, CEO at CommCorp International, a Delhi -based trading firm. — Reuters
	Govt to go back to SC for directions on spectrum auction after March 11 Tribune News Service New Delhi, March 6 The Empowered Group of Ministers on telecom headed by Finance Minister P. Chidambaram which met Wednesday to discuss the parameters for the third round of spectrum auction did not take any decision on it. Sources close to DoT said that the meeting remained inconclusive and the EGoM would meet again to take a final call following which the government would go the Supreme Court with its response. The next EGoM meeting is expected to take place after the second round of the auction, scheduled to start on March 11, gets over. The EGoM was to decide on the number of telecom circles in which spectrum would be auctioned in the third round.
	Sony launches Xperia Z in India, aims to triple cellphone sales New Delhi, March 6 Sony Corp aims to triple sales of its mobile phones in India to Rs 35 billion (US $638 million) in the year to March 2014, Kenichiro Hibi, managing director of its India unit, said, at the launch of the company's Xperia Z high-end smartphone. The smartphone, which is priced at Rs 38,990 in India, went on sale in Japan last month and is now available in 60 countries. It is part of the Japanese electronics group's push for a greater market presence in mobile devices. In India, Sony had a 9% share of the smartphone market last quarter making it a distant No.2 behind market leader Samsung's 40% share, according to research firm Canalys. Sony’s flagship smartphone Xperia Z features a 5-inch full HD display, is water and dust resistant and sports a scratch-resistant glass body. The device competes against the likes of HTC Butterfly, Nokia Lumia 920 and BlackBerry Z10, along with upcoming smartphones like Samsung Galaxy S IV and LG Optimus G Pro. The Xperia Z, whose operating system is Android 4.1 (Jelly Bean) with a planned Android 4.2 upgrade, has a TFT touchscreen with 1920x1080p resolution and 441ppi pixel density. It features a 1.5GHz quadcore processor, coupled with 2GB RAM, and has 16GB internal memory with microSD support up to 32GB. The Xperia Z smartphone boasts of 2G, 3G and 4G connectivity with Wi-Fi, NFC, Bluetooth 4.0 and micro USB 2.0. It has 13MP rear camera with LED flash and a 2.2MP front snapper and is powered by a 2,320Ah battery. — Agencies
	Fertilizer spending crunch ahead Mumbai, March 6 After effectively halving its subsidy on fertilizers for 2013-14 in the budget, India will have to allow producers to take the politically se'nsitive step of hiking urea prices to farmers or provide additional funding, industry officials say. If the government fails to provide the funds, companies would stop production and that could trigger a shortage of fertilizers, which help farms produce the massive amounts of grains the government gives at cheap prices to the poor. Fertilizers are the third-biggest item in the government's huge subsidy bill after oil and food. New Delhi has already cut some support from fuel prices but has hesitated to rein in other spending ahead of elections that must be held by May 2014. In his budget for the year starting April 1, 2013, Finance Minister P. Chidambaram on Thursday estimated the fertiliser subsidy at Rs 659.72 billion, broadly unchanged from a revised estimate of Rs 659.74 billion for the current year. But fertilizer companies say this year's subsidy is far short of what they need to make up for selling urea, potash and phosphate at government-set low prices and they have been told the difference will come from 2013-14 finances. "The outstanding amount from the current year is nearly Rs 35,000 crore. This would be paid from the subsidy allocation for next year," said U.S. Awasthi, MD of IICO cooperative. "Effectively the government has allocated only Rs 30,000 crore for next year," he said. The government quite often defers some payments for a couple of months, but the fertilizer subsidies have not been paid since August and the amounts are much larger this time. The country's twin deficits — fiscal and current account — have reached levels that have prompted a wave of prudence from the government, but the FY14 budget kept an eye on elections due by next year and went for a surge in spending to push growth. Pushing back spending on subsidies into 2013/14 would help Chidambaram reduce the fiscal deficit for the current year. — Reuters