Pernod withdraws court challenge against $314 million India tax demand

• India alleges Pernod withheld age and composition data on whisky imports to reduce its 150% tariff obligations over multiple years
• The tax dispute adds to Pernod's regulatory troubles in India, including a license suspension and a separate ban in New Delhi related to liquor policy violation allegations
• Pernod initially challenged the demand in court arguing India failed to provide investigation data, but has now opted for a statutory appeal process with the tax authority

Summary

Key Development: French spirits giant Pernod Ricard has withdrawn its court challenge against a $314 million tax demand from Indian authorities, pivoting instead to pursue an internal administrative appeal process with the tax authority itself.

Background: The dispute centers on allegations that Pernod undervalued Scotch whisky imports over several years by withholding information about the age and composition of its products, thereby significantly reducing its tariff obligations. India imposes a 150% tariff on such imports. The investigation has been ongoing for four years, with the formal tax demand issued in September.

Market Significance: India represents approximately 10% of Pernod's global sales and is the company's largest market by volume, making this dispute particularly significant. The tax case compounds existing regulatory challenges for Pernod in India, including a ban in New Delhi related to alleged liquor policy violations, which the company denies.

Legal Strategy: Pernod initially challenged the tax demand in May, arguing that Indian authorities failed to provide investigation data that would have allowed the company to mount an adequate defense. The company has now opted for a "statutory alternative remedy of appeal" within the tax authority system rather than continuing litigation in Delhi High Court.

Product Portfolio: Pernod Ricard produces premium spirits including Chivas Regal whisky and Absolut vodka.

Neither Pernod Ricard nor Indian tax authorities have commented on the withdrawal. The late Monday court order marks a new development in what has become Pernod's "biggest headache" in one of its most crucial markets.