Rs 2,400-cr tax claim: Nokia told to deposit 10%

The Madras High Court on Tuesday ordered Finnish mobile phone manufacturer Nokia to pay 10 per cent of the Tamil Nadu government’s tax claim of around Rs 2,400 crore.

The court also asked the state government’s Sales Tax department to look into the tax matter afresh.

Last month, the Tamil Nadu government sent a tax notice of around Rs 2,400 crore for three years — 2009-10, 2010-11 and 2011-12 to Nokia, saying that the company had sold its devices in the domestic market instead of exporting at its Sriperumbudur plant.

Hearing the case filed by Nokia against the state government's tax notice the court directed the company to pay 10 per cent of the tax claim in eight weeks.

Nokia has said it considers the claim to be completely "without merit" and runs counter to domestic tax laws.

The judge also directed the deputy commissioner (CT) of enforcement (South) to give an opportunity to Nokia for hearing, peruse the documents and then pass orders on "merits" in accordance with law upholding the handset makers' contention that the order was passed without being heard.

The judge, while declaring that the demand notices issued by the authorities are still valid, in his order said "the effect of quashing the assessment orders will not totally take away the right of the authorities to proceed further in this matter."

Nokia had filed a writ petition with the Madras High Court to contest the claim from the Tamil Nadu tax department, which has moved to assess sales tax on export of devices from its Chennai facility.

"It is absurd that the Tamil Nadu tax authority is claiming that devices made in Chennai were not exported and were instead sold domestically in India.

We contend that this allegation has no basis in reality whatsoever; it could easily be rebuffed by a check of documentation provided to various governmental departments, including Customs", the company said.

The Tamil Nadu government had accused Nokia of evading tax, but the company disputed the claim.