Delhi govt bans AB Inbev for 3 years over tax eva­sion

Hindustan Times (Delhi) - - WORLD - Reuters

NEWDELHI: In­dia’s cap­i­tal city has banned the world’s largest brewer, An­heuser-busch Inbev (AB Inbev), from sell­ing its prod­ucts in the key New Delhi mar­ket for three years for al­legedly evad­ing lo­cal taxes, gov­ern­ment orders seen by Reuters showed.

The city gov­ern­ment orders from ear­lier this month fol­lowed a three-year in­ves­ti­ga­tion which found that beer maker Sabmiller—ac­quired by AB Inbev in 2016 for around $100 bil­lion— used du­pli­cate bar­codes on its beer bot­tles supplied to city re­tail­ers that year, al­low­ing it to pay lower levies.

AB Inbev said in a state­ment it de­nied the Delhi gov­ern­ment’s al­le­ga­tions and would ap­peal against the order.

“The bar­codes were be­ing duplicated by ... Sabmiller and supplied to the re­tail out­lets to evade pay­ment of ex­cise duty,” said a 19-page order, dated July 16, which de­tailed the find­ings.

In a sec­ond order last week, the Delhi city au­thor­ity said that AB Inbev should be put on a “black­list” for three years. It also called for the seal­ing of two of AB Inbev’s ware­houses in the cap­i­tal city, an ac­tion that a se­nior Delhi gov­ern­ment of­fi­cial told Reuters on Tues­day had al­ready been com­pleted.

“This means the com­pany is de­barred from Delhi mar­ket for all pur­poses, un­less they ap­peal against this,” said the of­fi­cial, adding that no fresh stock of AB Inbev beer brands can be sold at liquor shops or restau­rants.

Nei­ther of the orders had been pre­vi­ously re­ported.

AB Inbev, which counts pop­u­lar beer brands such as Bud­weiser, Hoe­gaar­den and Stella Ar­tois in its port­fo­lio, told Reuters the Delhi gov­ern­ment’s al­le­ga­tions re­lated to op­er­a­tions of Sabmiller prior to its takeover, and it looked for­ward to re­ceiv­ing a fair hear­ing on the mat­ter.

“In­tegrity and ethics are part of our core val­ues ... (We) look for­ward to pre­sent­ing our views in full co­op­er­a­tion with the ex­cise ap­pel­late process,” a com­pany spokesman said.

AB Inbev is the sec­ond big­gest player in In­dia’s $7 bil­lion beer mar­ket, ac­count­ing for a 17.5% mar­ket share, ac­cord­ing to re­search firm IWSR Drinks Mar­ket Anal­y­sis.

Though sep­a­rate lo­cal mar­ket share fig­ures were not avail­able, in­dus­try ex­ec­u­tives said the Delhi ban would be a ma­jor set­back for AB Inbev, which is also bat­tling a sep­a­rate Indian an­titrust probe con­cern­ing al­leged beer price fix­ing by Sabmiller and other com­pa­nies.

“New Delhi re­mains an ex­tremely crit­i­cal mar­ket for any beer com­pany ... this is the coun­try’s so­cial cap­i­tal, apart from Mum­bai. It’s a show­case mar­ket for the premium beer port­fo­lio,” said a for­mer se­nior AB Inbev ex­ec­u­tive, who de­clined to be iden­ti­fied.

San­deep Chi­lana, a New Del­hibased lawyer spe­cial­iz­ing in ex­cise law, said that rules man­date each beer bot­tle sold in the city has to have a unique bar­code for track and trace pur­poses, and to en­sure there is no duty eva­sion.

MINT

AB Inbev is the sec­ond big­gest player in In­dia’s $7 bil­lion beer mar­ket, ac­count­ing for a 17.5% mar­ket share.

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