SABMiller Appeals India Tax Demand Of INR1.83 Billion, Moves Court

SABMiller PLC (SBMRY) has appealed a INR1.83 billion ($40.84 million) tax notice from India related to a 2006 acquisition and filed lawsuits challenging the demand, joining another British company, Vodafone Group PLC (VOD.LN), in fighting tax claims related to buying of assets in India from companies based abroad.

London-based SABMiller, the world's second-biggest brewer by volume after Anheuser-Busch InBev NV (ABI.BT), bought rival Foster's Group Ltd.'s (FBRWY) Indian business for $120 million in 2006. Local authorities said SABMiller should have withheld tax on behalf of the tax department while paying the seller.

The demand includes taxes and interest, a senior tax department official told Dow Jones Newswires, asking not to be named.

In an emailed statement, SABMiller said the notice is for A$39.5 million.

"SABMiller has applied for rectification of the order passed by the tax officer. It has also lodged two writ petitions before the Bombay High Court," challenging the jurisdiction of the tax authorities and the demand notice, SABMiller said. The court has granted a stay until it hears the petition again in June, the company added.

The tax claim is subject to an indemnity granted by Foster's to SABMiller, the British brewer said.

Foster's Group said it is confident of the position it took over tax in India and will "vigorously defend" its case in Indian courts.

In an email to Dow Jones Newswires, Foster's didn't explain why it doesn't have to pay tax in India, but said any liability related to the tax claim will remain with Foster's.

Vodafone has been fighting a battle against local authorities over the tax demand related its 2007 buy of a 67% stake in Indian mobile services provider Hutchison Essar Ltd. from Hong Kong's Hutchison Whampoa Ltd. (0013.HK) for $11.2 billion.

Local authorities have asked Vodafone to pay $2.6 billion in taxes and interest on behalf of Hutchison. Vodafone has contested the demand, saying it doesn't have to pay tax in India as the deal was between two foreign-registered entities outside the country.

The case is currently before the Supreme Court of India.

-By Kenan Machado, Dow Jones Newswires; [phone]; [e-mail]

--Prasanta Sahu in New Delhi contributed to this article