Volkswagen sues Indian authorities on $1.4-billion tax demand
German automaker Volkswagen has sued Indian authorities to quash a $1.4-billion tax demand made last year, a Reuters report said.
The news agency said that Volkswagen’s arm Skoda Auto Volkswagen India, in its filing at the High Court in Mumbai, stated that the “impossibly enormous” tax demand is contrary to India’s import taxation rules for car parts and puts at risk its investments of $1.5 billion in India while being detrimental to the foreign investment climate.
Last September, India had slapped the demand notice on Volkswagen for employing a strategy to break down imports of some of its cars into many individual parts to lower its duty.
Volkswagen India had kept the Indian government informed of its “part-by-part import” model and received clarifications in its support in 2011, the company told the court, according to Reuters, which said it had viewed the filing. The tax notice is “in complete contradiction of the position held by the government (and) places at peril the very foundation of faith and trust that foreign investors would desire to have in the actions and assurances of the administration, the January 29 court filing states,” it quoted from the filing.
Legal assistance
Škoda Auto Volkswagen India Private Ltd (SAVIPL) stated that it has taken legal assistance on the tax demand.
“SAVWIPL is availing itself of all legal remedies in response to the Show-Cause Notice as permitted under the law. SAVWIPL is committed to operating as a responsible organisation, ensuring full compliance with all applicable global and local laws and regulations. Compliance with regulatory requirements is one of SAVWIPL’s fundamental principles, and we are cooperating fully with the authorities on this matter,” the company stated.
According to Reuters, Volkswagen imported entire cars in unassembled condition that attracts import tax up to 30-35 per cent in the country under completely knocked-down units. The notice by the tax authorities stated that the company evaded the levies by ‘’mis-declaring and misclassifying imports’ as ‘individual parts’ with a 5-15 per cent duty. The imports were made by Volkswagen India and Škoda Auto Volkswagen India for models including Skoda Superb, Kodiaq, Audi A4, Q5 and Tiguan SUV.
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