Skoda Auto Volkswagen India has moved the Bombay High Court against the Indian tax authorities challenging a ₹11,000-crore (about $ 1.4 billion) demand for alleged customs duty fraud related to the import of cars as completely knocked down (CKD) units.
The auto company, an arm of German car maker Volkswagen, has filed the case seeking to quash the ``impossibly enormous’’ tax claim.
Skoda Auto Volkswagen India said it is availing all legal remedies in response to the show cause notice as permitted under the law.
According to a Reuters report, Volkswagen feels that the tax claim is contradictory to India’s import taxation rules and it will affect the company’s business plans in the country.
"Skoda Auto Volkswagen India is committed to operating as a responsible organisation, ensuring full compliance with all applicable global and local laws and regulations," a spokesperson said.
"Compliance with regulatory requirements is one of the company's fundamental principles, and we are co-operating fully with the authorities on this matter," a PTI report quoting the company said.
The Indian arm was slapped a show cause notice by authorities in September last year for allegedly importing the vehicles in an unassembled manner — called CKDs — which usually attract an import tax of up to 35 per cent.
However, the company has been alleged to have classified them as parts or individual units which attract lower duties of 5-15 per cent.
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.
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.
In July 2018, the Volkswagen Group announced investments of around 1 billion euros as part of the India 2.0 project.