Volkswagen Faces Fresh Hearing in India Over $1.4 Billion Tax Dispute

Volkswagen will have to face a fresh hearing in India over a $1.4 billion tax dispute, after a Mumbai court said it could not deliver its judgment within the required time.

The case relates to allegations by Indian tax authorities that Volkswagen wrongly classified car parts imported into India over a 12-year period. Authorities say the company imported almost complete cars in unassembled form but declared them as separate parts to avoid higher import taxes.

If treated as completely knocked down, or CKD, units, the imports could have attracted taxes of around 30% to 35%. Volkswagen has rejected the allegations and defended its import practices.

The case had already been argued and was awaiting a verdict for more than a year. But after India's Supreme Court set limits on how long courts can take to issue judgments after hearings are completed, the Mumbai High Court said a verdict could not be delivered within the required period.

A new panel of judges will now hear the case at a later date, extending one of Volkswagen's biggest tax disputes in India.

The company has described the case as a matter of "life and death" for its India business. The dispute also comes as Volkswagen is in talks with a potential partner for its operations in the country.

Volkswagen has been present in India for more than 20 years but remains a small player in the country's growing car market. The prolonged tax dispute has raised concerns among investors about the challenges foreign companies can face from lengthy legal battles in India.