Diageo's India unit searched as state tax officials review Scotch imports

United Spirits, the Indian unit of liquor giant Diageo, said on Friday that it was searched by tax authorities from the western Indian state of Maharashtra, amid an investigation into misclassification of Scotch imports.

* Maharashtra's Commissioner of State Tax initiated the search on October 19 and concluded on Thursday, the company said.

* United Spirits added that there was no impact on financial or operational activities due to the search.

* The company did not provide details around the reason for the search or on which premises it was conducted.

Read more: United Spirits’ popular segment sales fall 22.7% as state policies squeeze margins

* United Spirits had earlier said it had been searched by the Directorate of Revenue Intelligence as part of an "industry-wide exercise" on October 16.

* The Indian tax authority is looking into whether liquor giants Pernod Ricard and Diageo wrongly classified some bulk Scotch imports, allowing them to pay lower tariffs, Reuters exclusively reported earlier this month.

* The tax department is concerned that companies are wrongly classifying ⁠bulk Scotch concentrates as products eligible for lower tariffs under the India-UK trade pact, Reuters reported.

* Under ⁠the trade pact, which took effect on July 15, India agreed to halve import taxes on some Scotch imports to 75% from 150%.

* United Spirits posted lower second-quarter profit on Wednesday.

* Net sales value for its popular liquor segment declined sharply, hurt partially by a steep tax on non-local brands in the state of Maharashtra.