Nokia has agreed to pay part of the Rs 4,000 crore claimed by the tax authorities as an interim measure. At the same time, in its compromise formula, the company has urged the Government to revoke the Tax Department’s order to freeze its assets before December 12, the deadline for Nokia to transfer its global mobile phone assets to Microsoft.
With the tax authorities freezing all the immovable assets of Nokia in India, the company’s factory in Chennai will be left out of the transition process unless the order is revoked.
The Finnish handset maker has met top Government functionaries over the last week and also filed a plea in the Delhi High Court. The court will hear Nokia’s case on November 28.
Poonam Kaul, spokesperson for Nokia India, confirmed that the company has filed a petition in the court. “This is the latest step taken by the company as it seeks a fair resolution with tax officials over issues that first emerged in January,” she said.
Nokia said it still expects the Microsoft agreement to close in the first quarter of 2014.
“If, however, the freeze continues, Nokia must prepare for the eventuality that the Indian factory assets do not transfer to Microsoft. This would create regrettable uncertainty at its Chennai facility as this is an industry where quick decisions are essential to success,” Kaul said.
According to sources, if the freeze order is not revoked Nokia could convert its Chennai plant into a contract manufacturing facility for Microsoft till the tax case is resolved.
The tax authorities froze Nokia’s mobile phone manufacturing plant in Chennai, certain other buildings and bank accounts in September. Following the Tax Department’s action, Nokia moved the Delhi High Court, which lifted the sanction on the bank accounts, but not on the immovable assets.
The move was ordered by the Department after the handset maker disputed a Rs 4,000-crore tax notice.