According to recent reports, Czech auto manufacturer, Skoda India, part of the VW group, agreed to pay Rs.30 crore before the Indian Supreme Court, within a period of four weeks as pre-deposit money to the Customs Department for beginning adjudication in front of the tax tribunal, where it had challenged the enforced Rs.194 crore duty.
Reports mentioned that justices H.L. Dattu and D.K. Jain admitted the request put forward by the Czech auto company, Skoda’s Indian division. They granted the company a period of four weeks for making the payment. The bench had said that the time which has been granted to the claimant by their order on May 2, was extended further by a time frame of four weeks from this day onwards.
On May 2, this year, the Indian Supreme Court had supported the decision of the tax appellate tribunal to ask Skoda’s Indian division to deposit a sum of Rs.30 crore in regards to the company’s dispute over the demand of Customs. The department made a demand for a sum of Rs.194 crore to the company as duty for the royalty of $45mn paid by Skoda India to their parent company, a division of the VW group.
According to reports, the bench discharged the petition Skoda India filed, and also requested the auto manufacturer to pay according to the directions laid down by the CESTAT or Customs Excise and Service Tax Appellate Tribunal. The Bombay HC had earlier rejected the petition by Skoda India.
According to reports, the Supreme Court also stated that they did not find grounds to hold up the order which was approved by the Bombay HC. The special leave appeal was then accordingly dismissed. According to information from the country’s Customs Department, Skoda, paid $45mn under the agreement of technology transfer, which was actually a part of 45,000 car kits value which was supplied by Skoda to their Indian subsidiary time and again. Skoda India has its plant in Aurangabad, and imports kits from their parent company to manufacturer cars.
Because of material, found in search operations and with the statements given by various people, the department sent a show cause notice to Skoda’s Indian division asking as to why the $45mn paid by them were not to be regarded as the price of raw materials which they had imported from their parent company. The department also slapped Rs.97.15 crore as duty, imposing a penalty under the Section 114A, Customs Act of 1962.
The department of tax also levied a fine against the company’s former managing directors and chartered accountants. This penalty was also reportedly challenged before CESTAT by Skoda India.