New Delhi, July 5 – The Enforcement Directorate (ED) on Tuesday conducted raids at nearly 40 locations in Uttar Pradesh, Madhya Pradesh, Bihar, and in southern states, in connection with a prevention of money laundering case linked to Vivo and associated Chinese firms.
Sources said the office of Vivo and the premises of a few other Chinese firms were raided as part of a case under Prevention of Money Laundering Act, 2002.
The CBI has also been probing the case and lodged a separate first information report (FIR).
In a statement to , Vivo said that it is cooperating with the authorities to provide them with all required information.
“As a responsible corporate, we are committed to be fully compliant with laws,” a company spokesperson said.
In April, the ED seized Rs 5,551.27 crore of Xiaomi Technology India Private Limited lying in the bank accounts under the provisions of Foreign Exchange Management Act (FEMA) connection with the illegal outward remittances made by the company.
The company had released a statement then saying, “We have studied the order from the government authorities carefully. We believe our royalty payments and statements to the bank are all legit and truthful. These royalty payments that Xiaomi India made were for the in-licensed technologies and IPs used in our Indian version products. It is a legitimate commercial arrangement for Xiaomi India to make such royalty payments. However, we are committed to working closely with government authorities to clarify any misunderstandings.”
On March 3, the Income Tax Department had said that they conducted raids against the Chinese firms dealing in telecom products and learnt that the companies were involved in tax evasion through fake receipts.
The I-T department had detected suppression of income of Rs 400 crore at that time.
The raids were conducted in the second week of February across India and in the National Capital Region.
The searches had revealed that the Chinese firms had made inflated payments against the receipt of technical services from its related parties outside India. The assessee companies could not justify the genuineness of obtaining such alleged technical services in lieu of which payment had been made as also the basis of determination of consideration for the same.
The search action had further revealed that the various firms had manipulated its books of account to reduce the taxable income in India through creation of various provisions for expenses, such as provisions for obsolescence, provisions for warranty, doubtful debts and advances, etc., which have little or no financial rationale. During the investigation, the groups had failed to provide any substantial and appropriate justification for such claims.
The company had said that they were working with authorities to clarify all misunderstandings.