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Madras HC asks tax dept to proceed with assessment

Adjourned matter related to deposit of 10% of the total tax claim of Rs 2,400 cr, for another two weeks

BS Reporter Chennai

The Madras High Court has adjourned hearing of Nokia India's appeal against a Single Judge order related to Rs 2,400 crore tax claim by the State Commercial tax department, for two weeks and asked the department to complete the procedures of assessment in the mean time.

The appeal was filed by Nokia India against the order passed on April 29, 2014 by Justice B Rajendran, who asked the Department to hear the tax matter afresh and to give an opportunity of personal hearing to the company while giving eight weeks' time to the company to deposit the 10 per cent of the tax claim of Rs 2,400 crore. Nokia's appeal is against part of the order, which asked the company to deposit the 10 per cent of the tax claim.

 

When the matter came up for hearing today, Acting Chief Justice Satish K Agnihotri and Justice M M Sundresh, adjourned the matter for two weeks. In the meantime, the assessing authority has to complete the procedures on production of relevant material by the assessee (Nokia India), added the Bench.

The counsel appeared for the government informed the court that the department is filing a writ appeal against the Single Judge's order.

However, Vikas Srivastava from Luthra & Luthra, the counsel for Nokia India informed the Court that the company is ready to submit the documents as per the requirement of the department and sought the Court to direct the department to conduct assessment at the earliest.

Following this, the appeal to set aside the order of Single Judge seeking the company to deposit 10 per cent of the total tax claim, has been put on pending for two weeks.

Earlier, when the matter came up for hearing on second week of June, A L Somayaji, Advocate General for Tamil Nadu, informed the Bench that the state government has also filed an appeal against the order of the Single Judge, which set aside the tax claim order of the Tax department.

Nokia India challenged the order saying that when the assessment orders passed by the Deputy Commissioner (Commercial Tax) have been set aside and quashed by the Single Judge, there is no basis in law for directing the company to deposit 10 per cent of the tax amount as a pre-condition for reviving the orders.

All these developments are related to a dispute between the company and Commercial Tax Department, which slammed a Rs 2400 crore notice against the company. According to earlier reports, the notice was issued alleging that the company sold mobile phones meant for exports in the domestic market and they need to pay VAT for three fiscals including 2009-10, 2010-11 and 2011-12.

It may be noted that the mobile handset manufacturing facility of Nokia at Sriperumbudur, near Chennai, was excluded from the recently concluded deal between Nokia and Microsoft for the formers' Devices and Services business, as the Income tax department at the Centre has freezed the facility, as it has slashed a Rs 21,000 crore tax notice on the company. The Department refused to allow transfer of the plant till the dues claimed by the department are not remitted by the company.

The facility has become a contract manufacturer for Microsoft, raising concerns among the employees about their job security. A large section of the workers in the facility has opted for Voluntary Retirement Scheme, while around 800-900 workers are working in the production facility at present, according to the Union sources.

Besides, these issues has also affected the suppliers of Nokia India in Sriperumbudur, which are also facing crisis now. As majority of their orders so far were from Nokia India and with the lower production in the handset manufacturing facility, the component manufacturers are trying to reduce manpower and other expenses.

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First Published: Jun 26 2014 | 12:10 AM IST

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