On Thursday, the court in Mumbai, India, defended its record tax claim of $1.2 billion against Volkswagen. The Indian side argued that the German company failed to provide necessary information in a timely manner, while the automaker countered that the demand was made too late.
Since 2024, India has accused Volkswagen of understating the value of imported cars over many years and paying tariffs below established norms. This legal case poses a serious threat to the automaker, which is currently negotiating with the Indian company JSW regarding the sale of a stake in its operations in India.
Volkswagen, which holds about 2% of the market in the world's third-largest automotive market, denies all allegations. The company previously stated that this dispute was a matter of 'life or death' for its business in India and that the claimed amount was 'incredibly huge.'
The dispute over the largest ever tax claim in India for import duties resumed last week after the Bombay High Court ruled in August to hear Volkswagen's appeal because the judges were unable to issue a decision on time.
Arguments of the Parties in Court
On Thursday, Volkswagen's lawyer, Arvind Datar, told the judges that the Indian tax authorities could not audit imports for 12 years because Indian law only allows officials to audit for the last five years. Furthermore, Additional General Counsel N. Venkataraman, one of the government's leading lawyers, noted that Volkswagen had not provided the requested information on time, adding that no other car manufacturer in the country importing components had engaged in such improper conduct.
India claims that Volkswagen declared its imports as individual auto parts and paid a tariff ranging from 5% to 15%, even though it was effectively importing 'almost a whole car' in unassembled form, for which it should have paid a tax of 30–35%.
This investigation has raised concerns among foreign investors, as lengthy cases concerning import tariffs and taxes have long been an issue for companies, affecting firms such as Samsung and LG. The next hearing in this case is scheduled for next Tuesday.