Nokia India has suffered a setback in the tax case with Indian IT department. India’s Supreme court has dismissed its appeal against Delhi high court’s order, which directed Nokia India to give a guarantee of 3500 crore ( USD 572 mn) covering its tax liabilities, in addition to the Rs 2,250 ( USD 375 mn) crore that it needs to deposit in an escrow account, before allowing transfer of the Chennai plant to Microsoft.
If you remember, Nokia’s Chairman and acting CEO Risto Siilasmaa has expressed concerns over this condition put by Delhi High Court.
Nokia’s chairman and interim CEO Risto Siilasmaa said the company was trying its best to ensure that it keeps the plant running. “If we are not allowed to transfer (the unit to Micosoft), we will have a factory, but we will not have a business.
And if we don’t have a business, we can’t manufacture anything in the factory. And that would be detrimental to our employees and we care deeply for our employees.
So we are trying to explore all possible means of finding a solution to to this issue.
During the last hearing in Supreme court, Nokia counsel has revealed that Nokia-Microsoft deal will be closed within 20 days and Supreme court observed that it can’t force Nokia Finland, the holding company to submit an assurance. SC also pointed that dividend of 3500 crore paid by Nokia India to Nokia Finland can’t be brought back, as it is the right of the subsidiary to pay dividend to the holding company.
Nokia seems is wiling to deposit Rs 2250 crore in an escrow account or give the sale price realized whichever is higher, after the deal with Microsoft goes through. But the IT department’s tax claims oscillate between 4000 crore to an astronomical 20000 crore. Nokia has dared IT department to attach its property and sell, so that it can recover anything more than Rs 2250 crore, the amount Nokia values its assets at.
However, Nokia India’s counsel ruled out the possibility of the parent company giving any guarantee. “If the department was so convinced, what has it done for one and half years? They should attach my property, sell it and recover the money.”
Srivastava also contended that Nokia’s tax liabilities, as estimated by the tax department, were way beyond its worldwide operations. “We can’t generate Rs 20,000 crore. You can’t ask the parent company to pay. Please attach my properties and sell.