6 days ago
Bombay High Court to Rehear Volkswagen’s $1.4 Billion Tax Challenge
Volkswagen is involved in a large tax dispute in India.
Indian customs authorities say the company declared imported car parts incorrectly.
They claim Volkswagen brought in almost-complete cars but described them as separate parts.
This allegedly helped the company pay lower taxes.
The authorities are seeking about $1.4 billion.
Volkswagen disagrees and says its practices were proper.
The Bombay High Court had already heard arguments but did not issue a verdict in time.
A new group of judges will now hear the case again.
Volkswagen has called the dispute extremely important for its India business.
The Bombay High Court will rehear Volkswagen’s challenge to a $1.4 billion tax demand.
The demand concerns alleged mis-declaration of auto-component imports over a 12-year period.
Authorities say Volkswagen imported nearly complete cars as completely knocked down units while declaring individual parts.
Volkswagen disputes the allegations and has defended its import practices.
A new panel of judges will hear the case because the verdict was not delivered within the stipulated time.
- Who
- Volkswagen and Indian customs authorities are the main parties; the Bombay High Court will rehear the challenge.
- What
- Volkswagen is contesting a $1.4 billion, or approximately ₹11,526 crore, tax demand.
- Where
- The case is being heard in the Bombay High Court in India.
- When
- The Bombay High Court announced the rehearing on Tuesday, more than a year after the original arguments concluded.
- Why
- The court said a verdict could not be delivered within the stipulated time, requiring a new panel to hear the case.
Indian Customs Authorities’ Position
Volkswagen’s Position
Import classification
Indian Customs Authorities’ Position
Authorities allege Volkswagen imported almost entire cars in unassembled, completely knocked down form but declared the shipments as individual auto parts.
Volkswagen’s Position
Volkswagen has defended its import practice and disputes the authorities’ tax claim.
Tax liability
Indian Customs Authorities’ Position
Authorities say the classification enabled Volkswagen to avoid the higher 30%-35% tax rate applicable to completely knocked down units.
Volkswagen’s Position
Volkswagen is challenging the resulting demand of about $1.4 billion.
Importance to the business
Indian Customs Authorities’ Position
The tax authorities seek recovery of the alleged unpaid dues from the company.
Volkswagen’s Position
Volkswagen has described the dispute as a matter of “life and death” for its business in India.
Key facts
- Tax demand
- $1.4 billion, approximately ₹11,526 crore
- Dispute period
- 12 years of auto-component imports
- Authorities’ allegation
- Volkswagen mis-declared imports to pay lower taxes
- Import classification at issue
- Completely knocked down units versus individual auto parts
- Higher tax rate cited
- 30%-35% on completely knocked down units
- Court action
- A new panel of Bombay High Court judges will rehear the case
- Business context
- Volkswagen is reportedly in talks with a potential partner for its India operations
Sources
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