By Arpan Chaturvedi and Aditya Kalra
NEW DELHI (Reuters) – India’s authorities has advised a court docket in Mumbai that agreeing to Volkswagen’s demand to quash a $1.4 billion tax invoice would have “catastrophic penalties” and encourage corporations to withhold data and delay inquiries, court docket paperwork present.
India’s highest-ever demand for again taxes associated to import duties got here after scrutiny of 12 years of Volkswagen shipments and has rekindled international traders’ fears over prolonged investigations. The automaker has described the case as a “matter of life and demise” for its India enterprise, and is combating the tax authority within the excessive court docket in Mumbai.
Volkswagen unit, Skoda Auto Volkswagen India, faces allegations that it misclassified element imports of some Audi, VW and Skoda automobiles to evade larger tariffs. Its key argument to quash the tax demand is the “inaction and tardiness” of tax officers in delaying cargo critiques.
The Indian tax authority advised the excessive court docket in a 78-page rebuttal that Volkswagen brought about the delays by withholding essential data and information about its imports.
Accepting the carmaker’s reasoning would enable importers to suppress important data after which declare that the time-limit for the tax authority to conduct a probe had handed, the authority stated in its March 10 submitting, which was not public and is being reported for the primary time.
This is able to have “catastrophic penalties”, they stated within the submitting.
The case shall be heard on Monday. Volkswagen and the Indian authorities didn’t reply to requests for remark.
Volkswagen is a tiny participant in India’s automobile market, which is third-biggest on this planet, and its Audi model lags luxurious friends corresponding to Mercedes and BMW. If discovered responsible it may face a tax invoice of $2.8 billion, together with penalty and delayed curiosity.
Prime Minister Narendra Modi has been courting international traders with guarantees of easier laws and decrease bureaucratic hurdles, however prolonged tax investigations that may set off lawsuits stretching over years stay a sore level.
Had New Delhi wrapped up its critiques earlier, Volkswagen has stated, it may have challenged the findings or re-evaluated its import technique. The tax discover despatched in September 2024 places “at peril the very basis of religion and belief” international traders want, it stated.
Within the newest authorities submitting, the tax authority argues Volkswagen was submitting “data and paperwork critically required for” finishing cargo critiques “solely in tranches”.
Source link