Tamil Nadu Government slapped a Rs.2,400 crore tax notice to Nokia India Friday March 21,2014

Nokia’s tax troubles mounted on Friday March 21,2014 after the Tamil Nadu Government slapped a Rs.2,400 crore tax notice on the company, and claimed that the devices made at the company’s Chennai plant were sold domestically instead of being exported. 

In India, exports are, by law, exempted from tax. 

Mobile phones sold domestically however are not. 

The Tamil Nadu tax authorities are now moving to assess sales tax on the export of devices from the company’s Chennai plant, according to a statement from Nokia. 

According to a company spokesperson, Nokia has filed a writ in the Madras High Court to contest the Tamil Nadu tax authorities’ claim. 

“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,” the company said in a statement.

“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,” the company added. 

This is the second tax dispute Nokia has found itself in the course of one year. 

The Nokia India is currently involved in a Rs. 21,000 crore tax evasion case with the Income Tax Department for allegedly withholding tax norms since 2006 while making royalty payments to the parent company in Finland.

 This tax dispute has resulted in Nokia’s Chennai plant coming under a cloud, as it will not be able to transfer it to software Microsoft giant until the dispute is resolved. 

The impending acquisition is set to close by the end of this month.

Nokia,the Finnish handset maker has invested over $300 million at its 210-acre plant in Sriperumbudur, which is located just outside Chennai. With production of over 500 million units in seven years, the plant employs 8,000 people.