TN govt tax notice: Nokia repeats lack of cash plea for escrow account

The state govt says Nokia sold mobile phones meant for exports in the domestic market

Finnish mobile maker Nokia’s India unit continues to say it cannot pay any money into an escrow account, as suggested by the high court (HC) here, on the Tamil Nadu government’s Rs 2,400-crore value added tax (VAT) demand.

On Tuesday’s hearing, Nokia senior counsel Arvind Datar told the HC they lacked liquidity, having paid Rs 780 crore to the central income tax department for this financial year, which had slammed a Rs 21,000-crore tax notice, too. The next hearing is next week.

The HC had earlier asked if the company could deposit a portion of the state government’s sales tax department’s claim (at least five per cent was the suggestion, of about Rs 120 crore) in an escrow account.

The state government had alleged, earlier this month, that Nokia had sold mobile phones meant for export in the domestic market. Hence, it said, the company owed dues on VAT for the financial years 2009-10, 2010-11 and 2011-12, totalling Rs 2,400 crore. In protest, Nokia India went to the HC.

At the previous hearing, Datar said they’d all the documents needed to show export of Rs 23,904 crore of equipment to a little over 30 countries, including 118,000 bills of lading, Customs documents and those from the Reserve Bank of India.

The company is fighting the alleged Rs 21,000-crore tax evasion notice from the central income tax department in various other courts, including the Supreme Court (SC). The SC on March 14 had ordered Nokia to give a Rs 3,500-crore guarantee before it transferred this Sriperumbudur unit to Microsoft; there has been a sale agreement to this effect. The SC order upheld a lower court verdict on the plant, challenged by the company.