Tax dispute: Nokia Finland neednt deposit Rs 3,500 cr now, Delhi HC directs I-T

Written by Kaushal shroff | New Delhi | Updated: Jan 25 2014, 21:12pm hrs
NokiaEarlier, the Delhi HC had allowed the Indian leg of the global Nokia-Microsoft deal to go through, subject to a host of condition.
The Delhi High Court on Friday told the revenue department there was no immediate need to direct Nokia Finland to deposit Rs 3,500 crore in an escrow account, adding the foreign company can be called upon to do so once it has exhausted all the legal remedies available to it and the demand against it and its subsidiary Nokia India (NIPL) has been solidified.

Earlier, the Delhi High Court had allowed the Indian leg of the global Nokia-Microsoft deal to go through, subject to a host of conditions that mandated that Nokia Finland will be liable to pay the tax demand raised against NIPL to the extent of Rs 3,500 crore.

The High Court in 2013 had attached NIPL's Chennai factory and had barred it from transferring the plant to Microsoft after considering the department's argument that NIPL will not be able to satisfy the existing and potential demands raised against it.

Subsequently, on December 12, the High Court had lifted the freeze of the Chennai plant, subject to a guarantee by Nokia Finland to pay up the tax amount if the company lost the case in the court.

For now, the court has asked Nokia Finland to file a simpler undertaking as contrasted with the undertaking filed by Nokia Finland on December 31. The company, in its undertaking, had reiterated and accepted the conditions mentioned in the December 12 judgment. However, the court has called on the company to file a simpler undertaking stating precisely that it has perused the conditions and is willing to abide by them without reiterating the conditions. The HC has called on the company to do so as different interpretations of the conditions are being taken up by the department as well as Nokia Finland leading to excessive and unnecessary litigation.

Additionally, the court on Friday also refused to issue notices to NIPL and Nokia Finland on an application filed by the department seeking clarification of the December 12 order.

The department, in its application, had said that the requisite information concerning the situs for deposit of Rs 3,500 crore and its mode of realisation has not been specified by Nokia in its letter of guarantee. The application had also highlighted that Nokia had not stated the duration within which it will deposit the said amount.

Senior counsel NP Sahni had earlier pleaded that necessary directions should be issued for placing the amount of Rs 3,500 crore in an escrow account. Additionally, he had asked the court to devise a mechanism for adjustment of refunds till the time the entire issue reaches finality.