Due to the tax dispute, the manufacturing facility at Sriperumbudur, considered one of the biggest plants for Nokia in the world, could not be part of the Microsoft deal, leaving in lurch hundreds of employees, Industries Minister P Thangamani told the assembly.
He was responding to a query by A Sounderrajan of CPI-M.
The Minister was apparently referring to the tax dispute to the tune of about Rs 21,000 crore towards existing and anticipated liability raised by the I-T department for the period 2006-13.
However, he did not refer to the Rs 2,400 crore tax demand slapped by Tamil Nadu Government's Commercial Tax Department, which Nokia has contested in Madras high court.
"Because of the Income Tax problem during the previous UPA, Microsoft did not buy the Tamil Nadu plant," he said.
The state government had assured the employees that it would take steps to solve the issue but many had by then accepted the company's Voluntary Retirement Scheme (VRS) fearing job-loss, the Minister said.
For three months, there were no orders received by the local facility even as around 900 persons were getting wages, he added.
About 5,700 people accepted the company's VRS, taking home sums ranging between Rs three lakh and ten lakh, he said.
The Finnish handset maker had about 6,600 people at the facility when it sold its handset business to US giant Microsoft for over USD 7.2 billion in April this year but tax disputes halted the Chennai plant beinging part of the acquisition.
As the Microsoft deal with Nokia concluded in April, the the Sriperumbudur facility was excluded out of the deal making it as a contract manufacturing unit.