The country's custom department has made a tax demand of $ 1.4 billion (about Rs 12,000 crore) from German car maker Skoda Auto Volkswagen India. The notice sent to the company for this went to the Bombay High Court against it and described the notice as 'arbitrary'. Now a new twist has come in this matter. After the hearing, Justice B. in Bombay High Court. A division bench of P. Kolabawala and Justice Firdaus Pooniwala has asked the Customs Department to file an affidavit, while in the last hearing, this division bench of the court praised the tax officer for notice.

The court bench on Wednesday directed that the Custom Department should explain its notice sent and submit an affidavit for this. The department should explain how its 'cause' reasons for a tax demand of $ 1.4 billion sent in September 2024 should not come under the limits of limiting.

What happened during the hearing?

The bench Skoda Auto was hearing the petition by Auto Volkswagen India. The Custom Department says that the company did not properly define its Skoda, Audi and Volkswagen cars. They have shown their import to one auto part, while this is the 'CKD import' of its cars. CKD import means a complete knocked down import. In this, a car is imported by parting and it is assembled in the factory in India. Whereas in the import of the auto part, one or two parts of the car are imported. Both of these are counted in different ways.

At the same time, Skoda Auto Volkswagen India says that the Custom Department cannot demand such tax suddenly in this way when it did not ask anything about it for many years. The company says that it has been depositing tax in the category of different auto parts for almost a decade.

On behalf of the Customs Department, it was said in the court that it has generated the demand of paying tax in the CKD category on the company only after a long investigation. On Wednesday, the court made it clear that it is not yet fully heard in this case. She just wants to understand from the Custom Department whether her sent notice comes under the limits of limitation or not. The Customs Department has to submit this affidavit by March 10.

How much is tax differences?

If you look at the difference of custom duty on CKD import and auto part imports, then 30 to 35 percent import duty is charged on the CKD unit, while imports of auto parts are implemented by 5 to 15 percent.

Court has praised tax official

During the last hearing of the case, Justice B.K. A division bench of P. Kolabawala and Justice Firdaus Pooniwala had also praised the company for serious research of tax official before issuing notice to the company. The court said that the custom duty officer should be praised, as they have seen the number of each part very carefully. Each part has a specific number. The officer has investigated each number and import. He has done deep research before issuing a show cause notice.