Nokia’s Chennai Plant under dispute again: Tamil Nadu Tax Authorities have their way!

The Chennai plant of Nokia which is in Sriperumbudur, is the largest plant manufacturing phones and also the factory which employs a lot of people- around 8000. The last time, the plant was under dispute with the Income Tax department.

The plant was not allowed to produce phones to distribute it within the city and actually should have exported it. The plant was under a dispute for not paying tax of about 21,000 crores while it sent royalty to its parent company in Finland. The tax trouble mounted on Friday, the 21st of March. The TN Government alleged a 2,400 crores notice to the company regarding the internal selling of phones.

As the company was acquired by Microsoft, only two years are left unless the name “Nokia” is removed and all the phones are changed or sold under the name Microsoft. The plant cannot be transferred to Microsoft as it is constantly under dispute. As exports are by law exempted from Tax in India, having exported the phones would have resulted in no or zero tax, while internal selling has some service tax towards it.

But according to a Salesperson or a person within the company, Nokia had not done any internal selling at all and it alleges that the TN Tax authorities are giving some false allegations. It has appealed to the Madras high court. The company said the following in a statement

"Nokia considers the claim to be completely without merit and counter to domestic tax laws. In India, exports are by law exempt from Tax, and Nokia have proved consistently that devices produced in Chennai are exported abroad. It is absurd that the Tamil Nadu tax authority is now claiming that devices made in Chennai were not exported and were instead sold domestically in India. We contend that this allegation has no basis in reality whatsoever, it could easily be rebuffed by a check of documentation provided to various government departments including Customs."

These cases which are filed against the Chennai plant might really be a huge problem for Nokia. Unless it gets over with the case, it will not help in its development at all. The plant has been avoiding/withholding tax norms since 2006. Get the case over with, Nokia.