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Volkswagen India to confront Rs 600 crore penalty

Snapshot: Volkswagen India has been penalized Rs 600 crore by the central excise department for allegedly evading taxes.

Three of the Volkswagen firms has been accused by the Central excise department of Pune, India for evading duty of over Rs 323 crore by undervaluing cars and these cars were sold in the country between January 2010 and December 2014, according to an adjudication order passed by the principal commissioner of central excise in Pune. Further, the central excise department in Pune also upheld the penalty for Rs 323 crore imposed on the three firms of Volkswagen, namely Volkswagen India, Skoda Auto Aurangabad and Volkswagen Group Sales India, taking the firm’s total liability to over Rs 646 crore.

When contacted, Volkswagen India’s official spokesperson said, “We have received the said order. However, we are still evaluating the details. Volkswagen has been doing all its transactions at an arm’s length and as per the well-accepted industry practices. We will appeal against the order.” And according to the Directorate General of Central Excise Intelligence (DGCEI), the three firms paid duty on the value of the car at the factory gate. This, officials said, allegedly violates norms as the three firms should pay duty on the value at which a car is sold to the customer by the sales office of Volkswagen in India.

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According to The Indian Express, an official said, “It is not an arm’s length transaction. There is mutuality of interest in financial transactions of the three companies. Therefore, as per the rule the value of the end seller in this case Volkswagen Group Sales is the value at which duty is to be detected“. Adding to this, the official said, “We have evidence to prove that the price at which their sales centre is selling to the customer is actually the price on which they should pay duty to government.”

Volkswagen India has sold 2.63 lakh vehicles between 2010 and 2014, according to the excise department data. While last year, Volkswagen ran in to trouble after the US Environmental Protection Agency found out that the engine had a software device which lowered emissions.

Source: The Indian Express

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