By Aditya Kalra

NEW DELHI, July 21 (Reuters) - France's Pernod Ricard has withdrawn a court challenge against India's demand of $314 million in back taxes for allegedly undervaluing Scotch whisky imports for years, an order shows, marking a new twist in a four-year-old investigation.

The tax case is the biggest headache for Pernod in India, which contributes roughly 10% of its worldwide sales‌ and is its biggest market by volume. The dispute comes on top of an antitrust case and a separate ban in New Delhi city that Pernod is battling due to ​allegations of liquor policy violations, which it denies.

Pernod PERP.PA had challenged the September tax demand which alleged the company withheld the age and composition of its whisky imports, significantly reducing its 150% tariff outgo, Reuters reported in May.

Seeking to quash the demand, Pernod argued in a New Delhi court that India had not provided it with investigation data during the probe which could have helped it defend itself.

Pernod has now decided to withdraw the court challenge to "avail statutory alternative remedy of appeal" - which rests with the tax authority itself, the Delhi High Court judges wrote in their order released late on Monday.

Pernod, the maker of Chivas Regal whisky and Absolut vodka, and Indian tax authorities did not respond to Reuters queries.