Pernod Ricard Challenges $314 Million Tax Demand in India

The French spirits giant is contesting a major customs duty dispute as it simultaneously battles a three-year liquor sales ban in New Delhi.

NEW DELHI — French beverage titan Pernod Ricard is navigating a critical legal standoff in India, as it formally disputes a federal tax demand of $314 million. The company is actively challenging allegations from Indian customs authorities who claim that the spirits giant undervalued bulk Scotch whisky concentrate imports to evade historically high tariffs.

The tax dispute, which dates back to long-standing import practices, comes as the company faces mounting regulatory pressure in its largest global market by volume. The demand concerns allegations that the Chivas Regal maker withheld the true age and composition of its imported malts to minimize duty payments, a charge the company maintains is without merit.

The Core of the Tax Dispute

Indian investigators allege that Pernod Ricard undervalued its bulk Scotch concentrate imports by 67.49%, effectively circumventing the 150% tariff historically imposed on Scotch imports to India. According to government filings, authorities claim the company intentionally used "internal malt codenames" to obscure the product’s true value and composition, making it difficult for customs officials to compare the imports against those of market rivals.

The company has categorically rejected these findings. In an official statement, Pernod Ricard asserted that it is addressing the matter through appropriate legal channels. The spirits maker argues that the investigation was conducted without providing the company access to key pricing data used by investigators, which it contends is "grossly violative of the doctrine of natural justice."

Regulatory Hurdles in New Delhi

Beyond the federal tax claim, Pernod Ricard remains locked in a three-year battle to resume liquor sales in the Indian capital. A New Delhi court recently dismissed the company’s latest plea for a license renewal, citing its status as an "accused" party in a separate investigation into the city’s now-scrapped 2021 excise policy.

Under current local regulations, the ongoing probe—which involves allegations of collusion with retailers to improperly boost market share—renders the company ineligible for a license. The resulting sales ban has effectively kept popular brands like Absolut Vodka and Chivas Regal off shelves in New Delhi, a market that previously accounted for approximately 5% of the company's total sales in India.

Official Sources Section

Information regarding the legal and regulatory standing of Pernod Ricard in India has been compiled from:

• Supreme Court of India: Regulatory filings and order records.

• Competition Commission of India (CCI): Antitrust investigation orders and case details.

• Pernod Ricard Corporate Statements: Official company responses to tax and licensing allegations.

• Government Filings: Customs department reports regarding import valuation and excise policy inquiries.

Quote Section

"The company rejects any suggestion of wrongdoing and is addressing this matter through the appropriate legal channels and remains confident in its position," according to statements issued by the company. Meanwhile, judicial officials stated that due to the ongoing liquor policy investigations, the company remains "ineligible" for a retail license in the capital at this time.

Why It Matters

For investors, the dual pressure of a multi-hundred-million-dollar tax claim and a regional sales ban represents significant operational risk in a country that is critical to Pernod Ricard’s global growth strategy. For consumers in New Delhi, the protracted legal battle ensures that premium international spirits brands may remain unavailable for the foreseeable future. The outcome of these cases will likely set a precedent for how international beverage firms navigate India’s complex excise and customs landscape.

Key Facts at a Glance

• Tax Liability: The Indian government has demanded $314 million in back taxes, with potential penalties that could raise the figure substantially.

• Market Status: Pernod Ricard remains excluded from the New Delhi market, where it has been unable to sell products since 2023.

• Core Allegation: Authorities allege the company undervalued Scotch concentrate imports by 67.49%.

• Global Significance: India is Pernod Ricard’s largest market globally by volume, recording $2.9 billion in sales last year.

Frequently Asked Questions (FAQ)

Why is Pernod Ricard facing a $314 million tax demand?

Indian customs authorities allege the company undervalued its bulk Scotch concentrate imports by using misleading composition data to bypass high tariffs.

When will Pernod Ricard resume sales in New Delhi?

The company’s plea to resume sales was rejected by the High Court in May 2026. As it remains an accused party in an ongoing liquor policy investigation, there is no immediate timeline for a return to the Delhi market.

How does this affect Pernod Ricard's global business?

While India is a major growth driver, the "ever-lasting litigation" and regulatory disputes have been identified by the company as a strain on its operational plans and investment outlook in the region.

Source: Supreme Court of India, Competition Commission of India, Pernod Ricard, The Economic Times, The Drinks Business