New Delhi, India – Volkswagen has filed a lawsuit against Indian authorities to quash an “impossibly enormous” tax demand of $1.4 billion (S$1.9 billion), arguing that the demand contradicts New Delhi’s import taxation rules for car parts and threatens the company’s business plans. The lawsuit, filed by Volkswagen’s unit Skoda Auto Volkswagen India, claims that the tax dispute jeopardizes its $1.5 billion investments in India and harms the foreign investment climate.
In September 2024, India issued the largest ever import tax notice on Volkswagen for allegedly breaking down imports of Volkswagen, Skoda, and Audi cars into individual parts to evade higher duties. Indian authorities accused Volkswagen of importing cars in unassembled condition to pay a lower duty, misclassifying them as individual parts coming in separate shipments.
Volkswagen India maintains that it kept the Indian government informed of its “part-by-part import” model and received clarifications in 2011. The company argues that the tax notice contradicts the government’s previous position and undermines the trust foreign investors place in the administration.
The High Court in Mumbai is scheduled to hear the case on February 5. Volkswagen India has stated that it is using all legal remedies while cooperating with authorities and remains committed to ensuring full compliance with all global and local laws.