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The Indian government has urged the Mumbai High Court to reject Volkswagen’s plea to quash a $1.4 billion tax bill, warning of “catastrophic consequences” if the automaker succeeds. The tax dispute, stemming from import duty assessments over 12 years, has raised concerns among foreign investors about India’s lengthy tax investigations.
Volkswagen’s Indian unit, Skoda Auto Volkswagen India, is accused of misclassifying imported components to avoid higher tariffs. The automaker argues that the delay in reviewing its shipments was due to the tax authority’s “inaction and tardiness.” However, in a 78-page filing, Indian authorities claim Volkswagen withheld crucial information and delayed proceedings.
If found guilty, Volkswagen could face up to $2.8 billion in taxes and penalties. This case comes as Prime Minister Narendra Modi seeks to attract foreign investors with promises of regulatory ease. However, prolonged tax disputes remain a major concern for global businesses operating in India.
The court is set to hear the case on Monday. The Indian government insists Volkswagen must respond to its tax notice through proper channels rather than litigate in court.
legal battle over a $1.4B tax bill. Authorities claim the automaker misclassified imports, while Volkswagen argues the delays are due to bureaucratic inefficiencies. Could this case impact foreign investment in India?
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