Madras high court sets aside Tamil Nadu govt's Rs 2,400 crore tax demand on Nokia

CHENNAI: The Madras high court on Tuesday set aside the Tamil Nadu government's commercial taxes demand on mobile handset maker Nokia, totalling a whopping amount of Rs 2,400 crore. The court held that issuing demand notices onNokia without affording an opportunity of hearing was not correct.

Justice B Rajendran, who set aside all the three separate notices issued by the commercial taxes department, however, directed the Finnish handset maker to deposit 10% of the total demand immediately.

According to the state government, handsets manufactured in India but not exported would entail 4% VAT, payable to the state government. In the absence of proof of export of handsets worth more than Rs 44,000 crore during three assessment years — 2009-10, 2010-11 and 2011-12 — the government was constrained to issue notices to Nokia.Nokia approached the high court saying the department had not given it an opportunity to explain its stand. "The deputy commissioner had worked with a single-minded goal to confirm the tax demand," Nokia said in its petition.

As for the state government's stand that despite being given an opportunity, Nokia failed to furnish all documents to prove exports, Nokia said it had submitted only sample documents because exports data was voluminous. "However, even without conveying that the entire documentation was required to be submitted, and without giving any further opportunity to Nokia, the deputy commissioner passed the order on February 28, 2014, in a biased manner and in undue haste," Nokia said.

On Tuesday, Justice Rajendran said: "The department is not correct in passing the impugned order without affording an opportunity of hearing to Nokia, especially when it sought time to produce voluminous documents running to 69 lakh pages."

He then directed the handset maker to deposit 10% of the deposit amount saying it was necessary to safeguard the interests of revenue.

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