Nokia in another tax row as TN tax dept slaps Rs 2400-cr notice

Last Updated: Fri, Mar 21, 2014 12:53 hrs

The Finnish handset maker Nokia is now facing another new tax dispute, Tamil Nadu Sales Tax Department has slammed a Rs 2,400 crore notice on Nokia stating that the company has been selling whatever produced from it's Sriperumbudur facility, around 40 kms from Chennai, in the domestic market, but was not exporting. In response to the notice Nokia filed a writ to the Madras High Court and said its a baseless claim by the Department.

It may be noted, Nokia already fighting alleged Rs 21,000 crore tax evasion case with the Income Tax Department in various courts in New Delhi, including the Supreme Court.

The notice which was signed by an additional officer from the Tamil Nadu Tax Department stated that the company has to pay the tax for three years - 2009-10, 2010-11 and 2011-12.

In an email statement to Business Standard, Nokia confirmed the development and said that it has filed a writ to the Madras High Court to contest a claim from the Tamil Nadu tax department, which has moved to assess sales tax on the export of devices from the company's Chennai facility.

"Nokia considers the claim to be completely without merit and counter to domestic tax laws. In India, exports are by law exempt from tax, and Nokia has proved consistently that devices produced at Chennai are exported abroad. Indeed, the company has been regularly assessed and audited by the tax authorities since 2006 without incident, and it has also won numerous export awards from governmental organisations". Nokia's facility recently crossed 800 million mark, since its inspection, at the facility.

The company further said, "it is absurd that the Tamil Nadu tax authority is now 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. Nokia will defend itself vigorously in this matter".

A senior source has said that the fact remains that the company has been exporting major portion of its produced to over 70 countries and documents have been submitted with the customs and with concerned department. "On what basis the Department has slammed the notice is not clear," he said.

The new set of trouble for Nokia comes at a time it is fighting hard to settle the issue on the alleged Rs 21,000 crore tax evasion case.

The Apex Court on March 14 ordered Nokia to give a Rs 3,500 crore guarantee before it transfers one of its biggest plants globally, which is located at Sriperumbudur, around 40 kms from Chennai, to Microsoft. The Order upheld a lower court verdict over the plant, which is the subject of a income tax dispute, and had been challenged by the Finnish company.

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