New Delhi, July 29 : A major scandal has hit Sri Lanka's electric vehicle sector, with John Keells Holdings PLC (JKH) -- one of the country's most prominent blue-chip companies -- allegedly under investigation for a possible Rs 3 billion tax fraud.

The case reportedly involves the import of more than 1,000 BYD Atto 3 electric SUVs under its subsidiary brand, JKCG Auto, according to reports.

Sri Lanka Customs has confirmed that a shipment of these vehicles was detained at the Port of Colombo amid a dispute over their declared motor capacity, which determines the amount of import duty charged, Lanka News reported.

Import documents are said to have declared the vehicles as having 100kW motors, which would place them in a lower tax bracket of around Rs 2.4 million per unit.

However, inspections and independent technical assessments have reportedly raised concerns that the vehicles may actually be fitted with 150kW motors -- a specification that would require an import duty of about Rs 5.4 million each.

The difference in classification could amount to billions of rupees in unpaid taxes.

Reports suggest that nearly all the vehicles in question have already been sold and registered to private buyers.

Some customers have allegedly been warned that they could face retroactive tax bills or even recalls if the investigation confirms the higher motor capacity.

John Keells Holdings has denied any wrongdoing, stating that the vehicles were imported in full compliance with manufacturer documentation and that the Sri Lankan variant is tuned to 100kW, similar to versions sold in Nepal and Singapore, according to the report.

The Customs Directorate of Revenue Protection has reportedly begun a forensic investigation into every BYD Atto 3 imported since 2023, including vehicles already sold to customers.

Industry observers warn that if over 1,000 vehicles are reclassified as 150kW models, buyers could face additional tax bills of up to Rs. 4 million each -- potentially triggering a wave of legal disputes.

/IANS