New Delhi. The Indian government has served a notice on Germany's leading automobile manufacturer Volkswagen for tax evasion of $1.4 billion (about ₹ 11,500 crores). It is alleged that the company has deliberately evaded tax by paying less tax on imported parts for its Audi, VW and Skoda cars. This case is being described as one of the biggest tax evasion cases in the country. On the allegations, Skoda Auto Volkswagen India said on behalf of Volkswagen, "We are a responsible organization and follow all global and local laws and regulations. We are analyzing this notice and are fully cooperating with the authorities."

This case has come to light at a time when Volkswagen is facing disputes with its workers in Germany and increasing pressure from Chinese competitors. The investigation by Indian officials also found that from 2012 till now, Volkswagen should have paid import tax and other duties of about $2.35 billion (about ₹ 19,000 crores) to the Indian government, but it paid only $981 million (about ₹ 7,800 crores). In this way, Volkswagen has defrauded the government of $1.36 billion (about ₹ 11,000 crores).

This is how the fraud was done:
This notice issued on September 30 states that Volkswagen imported its cars as almost completely unassembled parts (CKD units). Under Indian rules, such units attract 30% to 35% import duty. But the company paid only 5% to 15% import duty by showing these imports as separate parts. Volkswagen's Indian unit Skoda Auto Volkswagen India made such import arrangements for models like Skoda Superb, Kodiaq, Audi A4, A5, Q5 and VW Tiguan SUV. Indian investigating agencies found that the company did this "intentionally" to avoid high import taxes through separate shipments.

The 95-page notice issued by the customs commissioner's office in Maharashtra said, "This logistical arrangement is an artificial scheme... Its operational structure is merely a ruse to avoid payment of due duty." The government has directed the company to respond within 30 days, but it is not clear whether Volkswagen has responded.