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Nokia tax row: IT department asks Delhi High Court to modify December 12 order

The Profits Tax division on Friday moved the Delhi Excessive Court docket in search of “guidelines/ clarifications” of the December 12 order by which the assets of mobile phone handset maker Nokia in India were unfrozen.

A bench, headed by Justice S Ravindra Bhat, posted the plea of the IT department for January 17 before another bench which had on December 12 paved the way for the sale of Finnish mobile firm to Microsoft subject to certain conditions.

The conditions included that Nokia India will deposit a minimum of Rs. 2,250 crores in an escrow account while its parent company Nokia Corporation would be liable to pay the tax dues as applicable under the Income Tax Act up to maximum of Rs. 3,500 crores.

Seeking modifications in the order, the IT department, in its fresh application, said “in the conditions imposed by the High Court …, the situs of amount of Rs. 3,500 crores and the realisation thereof is not stated/ directed.”

“It is requested, for the sake of clarity, to issue necessary directions for placing the aforesaid amount also in an escrow account preferably in India. The IT department also very humbly seeks directions/clarification for payment of the said amount of Rs. 3,500 crores as and when the demand is raised and is due for payment.”

The court had on December 12 allowed the plea of Nokia for lifting of a stay on transfer of its assets in India. The firm had said that the injunction will jeopardize the sale of its Indian arm to Microsoft under a $7.2 billion global deal.

The IT Department, which had rejected the offer of Nokia to pay a minimum deposit of Rs. 2,250 crores to it, said Nokia India and Nokia Corporation owe it Rs. 21,153 crores as total tax liability (existing and anticipated), including penalty during a seven-year period from 2006-2013.

The IT department has also sought certain directions “pertaining to the mechanism for adjustment of refunds till the tax issues reach finality.”

“Petitioners have yet to furnish the undertaking and guarantee bond in terms of the Court’s directions dated 12.12.2013 and the Appellant/Respondents (IT department) reserve their right and seek liberty to give their comments /response/objections, if any, as and when the guarantee bond/undertaking is made available by the Petitioners (Nokia),” it said.

On December 12, in a major relief, the court had unfrozen the assets of the Finnish firm in India, particularly the Chennai manufacturing plant.