Volkswagen moves HC over $1.4 bn tax notice

Skoda Auto Volkswagen India has filed a case against tax authorities over the Rs 11,000 crore (about $1.4 billion) show cause notice for alleged customs duty fraud related to the import of cars as completely knocked down units.

The company has approached the Bombay high court regarding the matter.

When contacted over the issue, Skoda Auto Volkswagen India said it is availing all legal remedies in response to the show cause notice as permitted under the law.

"Skoda Auto Volkswagen India is committed to operating as a responsible organisation, ensuring full compliance with all applicable global and local laws and regulations," it added.

"Compliance with regulatory requirements is one of the company's fundamental principles, and we are cooperating fully with the authorities on this matter," it stated.

The Volkswagen group is currently led in India by Skoda Auto Volkswagen India.

It has been slapped a show cause notice by authorities for alleged customs duty fraud to the tune of around Rs 11,000 crore (about $1.4 billion) over the import of cars as completely knocked down units.

It is understood that the alleged customs duty fraud is applicable only to cars, which are brought under the CKD (completely knocked down) route.

The VW group, through its various brands, including Audi, VW, and Skoda, sold a variety of models, which have been imported as CKD units and assembled in India.

Some of the models include Octavia, Superb, Kodiaq, Passat, Jetta, and Tiguan.

The group has been accused of deliberately misleading customs authorities through its mode of import of parts as individual units rather than as a component of a CKD unit, which attracts higher import duty.

In 2019, Volkswagen Group India received regulatory and statutory approvals to merge its three passenger car subsidiaries in the country into one entity -- Skoda Auto Volkswagen India in order to work more efficiently at all levels to gain significant market shares for Volkswagen and Skoda by 2025.

In July 2018, the Volkswagen Group announced investments of around 1 billion euros as part of the India 2.0 project.