Suryaa Business Desk: Germany's famous automobile giant Volkswagen (Volkswagen) has faced a huge setback in India. Domestic customs authorities... Germany's famous automobile giant Volkswagen (Volkswagen) has faced a huge setback in India. The Bombay High Court passed key orders on a petition filed by the company challenging the record tax demand of $1.4 billion (roughly over Rs 11,500 crore) from the domestic customs authorities. Although the verdict was reserved after long arguments were over in the past, the court made it clear that due to the workload and administrative reasons in the court, this case will have to be heard from the beginning again.
With this, this huge tax dispute, which is the topic of discussion at the international level, seems to have come back to the beginning. The main allegation of the revenue authorities is that Volkswagen has evaded taxes while importing CKD units for manufacturing cars in the Indian market. The tax authorities have issued these notices alleging that the company has misused the rules of paying lower duty on parts than the taxes applicable on complete vehicle imports and is involved in deliberate tax evasion. However, Volkswagen strongly denied these allegations. They claim that they have imported according to the rules and there is no malice on the part of the government officials.
Concerned that this heavy tax demand will threaten their Indian business expansion and existence. Economists analyze that such tariff disputes are causing concern among foreign investors at a time when international automobile companies are investing in India. At a time when the manufacturing sector in the country is being boosted, the pending tax disputes for years are expected to turn negative for the business environment. In the wake of the Bombay High Court's orders, the automobile circles are all excited about what arguments Volkswagen will make in the next few days and what kind of verdict the court will give.