The Bombay High Court has ordered a fresh hearing in the long-running customs duty dispute involving Skoda Auto Volkswagen India Pvt. Ltd. after the bench that had reserved judgment was unable to pronounce its decision within the prescribed period.
The dispute revolves around allegations by customs authorities that Volkswagen imported vehicle components in a manner that allowed it to pay lower customs duties than would have applied to Complete Knocked Down (CKD) units. According to authorities, the company allegedly structured imports as individual parts while effectively bringing in substantially complete vehicle kits for assembly in India.
The matter had been extensively argued before a division bench of the Bombay High Court, which reserved judgment in early 2025. However, citing workload constraints and the inability to deliver a verdict within the timeline prescribed by judicial guidelines, the bench formally released the matter.
As a result, the case will now be assigned to another bench dealing with indirect tax and customs matters. Both parties are expected to present their arguments again, effectively restarting proceedings before the newly constituted bench.
The dispute is regarded as one of the most significant customs and tax controversies involving a multinational automobile manufacturer in India. Customs authorities contend that the import structure enabled Volkswagen to avoid higher duties applicable to CKD imports, while the company maintains that its import practices complied with applicable law and regulatory clarifications.
Volkswagen has also argued that the proceedings involve substantial financial implications and broader concerns regarding certainty in India's tax and customs framework. The company has challenged the validity of the customs demand and raised objections regarding delays in regulatory action.
Pending the fresh hearing, the High Court has granted temporary protection to maintain the existing position for a limited period, enabling the parties to approach the appropriate bench. The outcome of the re-hearing is expected to have important implications for customs classification disputes, indirect taxation, and import practices in India's automotive sector.
The reassignment highlights the procedural impact of delayed judgments and underscores the judiciary's commitment to ensuring that matters are decided within prescribed timelines. Legal experts are closely watching the case due to its potential influence on future customs enforcement and tax litigation involving multinational corporations.