NEW DELHI: The Delhi High Court has stayed a tax notice that required Nokia to pay Rs 2,000 crore within five days and has asked the government not to take any coercive action against the company.
Nokia India had challenged the income tax department’s demand notice giving it five days to make the payment for alleged failure to deduct taxes for payments made to its parent. The notice was served on March 19 and Nokia filed a writ petition last Friday, questioning the move to reduce the payment period from the usual 30 days to five days.
The demand notice follows surveys conducted by tax officials earlier this year, which Nokia contested. “Nokia reiterates its position that it is in full compliance with local laws as well as the bilaterally negotiated tax treaty between the governments of India and Finland, and will defend itself vigorously… Nokia remains willing to cooperate fully with Indian tax authorities in accordance with all applicable laws. Nokia has enjoyed a long and fruitful relationship with India, and looks forward to a prompt and just resolution to this matter,” the company said in a statement.
Tax officials, however, said they had collected evidence — documentary and corroborative — before issuing the demand notice. “The notice is absolutely as per law and the law also gives the department powers to curtail the payment period,” said an official who did not wish to be identified.
In the Delhi HC, Nokia’s lawyer cited past rulings on when the payment period should be reduced and argued that there was neither apprehension that the handset manufacturer would leave India to evade tax, nor was the parent liquidating its assets to evade taxes and defeat the demand raised. He further said that Nokia was not winding up its business in the country or leaving.
The government, however, countered this by saying that the case relates to repeated defaults since January 2006 and if allowed more time, Nokia India will explore legal options to delay and obstruct recovery. “It is also feared that tax avoidance scheme may be put in place to avoid payment of due tax as verified by the sample mail attached herewith,” solicitor general Mohan Parasaran said. The government also referred to Nokia’s internal mails and alleged that Nokia was contemplating transferring large amounts of cash out of India.
Nokia denied any such move and its lawyer Parag Tripathi pointed out that the tax demand gave the company 30 days for certain years, while for others it gave five days. “So, if the petitioner (Nokia) was considered good enough for the purposes of invoking the normal period of 30 days, there was absolutely no reason for invoking the shorter period of five days in respect of other years,” Nokia argued.
The company has also assured the court that only routine fund transfers would be made from the country.
Source-Times of india