India’s Volkswagen Skoda plant. Skoda Auto Volkswagen India, a division of Volkswagen, is accused of misclassifying imported parts for some Audi, VW, and Skoda vehicles to avoid paying higher taxes.
According to court filings, the Indian government warned a Mumbai court that granting Volkswagen’s request to halt a $1.4 billion tax payment would have “catastrophic consequences” and incentivize businesses to conceal evidence and postpone investigations.
Following an examination of 12 years’ worth of Volkswagen shipments, India made its largest-ever claim for import duty back taxes, reigniting concerns among international investors about drawn-out probes. The carmaker is battling the tax department in the Mumbai high court, calling the dispute a “matter of life and death” for its India business.
Skoda Auto and the Volkswagen unit Volkswagen India are accused of misclassifying imports of parts for some Audi, VW, and Skoda vehicles to avoid paying higher taxes. The Indian tax office’s main defense for rescinding the tax demand is the “inaction and tardiness” of tax officials in postponing shipment evaluations. In a 78-page response, the Indian tax office informed the high court that Volkswagen was responsible for the delays by omitting essential data and information.
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