Northern, WI 03/24/2014 (usastockreport) – Nokia Corporation (ADR) (NYSE:NOK) the Finnish Mobile Giant on March 21, 2014 challenged $394.60 million tax demand notice levied by the Tamil Nadu government on its Indian unit.
The demand comes as a setback to mobile maker who has to transfer all its Indian assets to Microsoft which includes the Chennai factory by the end of this month. This also includes the devices being sold by Nokia unit of Chennai. Earlier, Microsoft Corporation (NASDAQ:MSFT) bought Nokia for $7.2 billion deal.
This comes on the heels of Supreme Court decision which refused to remove the ban placed on the sale of its Indian assets in a different case. This is also related to the payment of tax dues.
Nokia is Defiant
Nokia dubbed the new tax claim made by the TN government as “absurd”. Further it had filed a petition in the Madras High Court to fight the claim made from tax department of Tamil Nadu. By next there will be hearing for the petition.
According to the company, by law export is exempted from tax in India and devices that were produced at Chennai were exported abroad and Nokia Corporation (ADR) (NYSE:NOK) has proved this on regular basis. Though the TN tax department alleged that reverse is the true and devices made in Chennai factory were not exported but were sold in India.
Future Course of Action
The company further added that this claim has no basis in the real ground they can be easily negated by the checking of documents given to different governmental departments which includes customs also. It is not going to affect its deal with Microsoft which is expected to close by the end of this month.
The apex court of India last week ordered Nokia Corporation (ADR) (NYSE:NOK) to give an $575.4 million guarantee and asked them to forfeit some of their legal defense right before the factory is transferred to Microsoft Corporation (NASDAQ:MSFT). It also directed its parent company to give an undertaking that it will fulfill the requirements for the payment of tax dues.
So the things are not going well for Nokia Corporation (ADR) (NYSE:NOK) at the Indian front which was at time one of the most revenue generators of the region.