ED raids 40 locations linked to Vivo, other Chinese firms in money laundering case

The Enforcement Directorate (ED) was conducting raids at 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 other Chinese firms.

Sources said the office of Vivo and the premises of a few other Chinese firms were being raided.

Vivo has not said anything as of now and the ED officials also have not come on record.

The CBI has also been probing the case and have lodged a separate FIR.

In April, the ED had said they 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 in 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.