Volkswagen is facing a significant crisis in India after being accused of evading taxes worth Rs 12,172 crore by the Maharashtra Customs department. The brand’s lawyer has labeled this situation as a “life and death” issue for the brand, sparking concerns that it may be forced to shut down its operations in the country. The customs department alleges that Volkswagen misclassified imports of Audi, Skoda, and Volkswagen vehicles as “individual parts” to evade higher customs duties, resulting in a penalty of 100% of the evaded duty, which amounts to Rs 24,544 crore, the largest penalty ever imposed on a carmaker by the Indian government.
The customs department has issued a show cause notice for 33,000 transactions between 2012 and 2024, and a Volkswagen official has confirmed that over 100 consignments were detained since the notice was issued in September 2024. However, the customs department has assured the Bombay court that no consignments belonging to the group have been detained and will not detain any such consignments in the future.
Despite the legal battle, Skoda Volkswagen has stated that it will continue to import its products into the country and is set to launch its global offering, the Golf GTI, in India soon. The brand’s lawyer has argued that the customs department has not issued a show cause notice in 12 years and has not provided any explanation for the sudden notice. If the penalties are not relieved, it remains to be seen whether Volkswagen will be forced to shut down its operations in India, which would have significant implications for the country’s automotive industry.