Tamil Nadu slaps fresh Rs2,500 -cr tax notice on Nokia

Troubles seem to pile on for Nokia's Indian operations. The Finland-based handset maker, already involved in a tax dispute with the Indian authorities that has gone all the way to the Supreme Court, has been slapped with a fresh Rs2,500 crore tax notice by the Tamil Nadu government.

A Nokia spokesman said in Helsinki on Friday that the Tamil Nadu claim over its Chennai plant is "absurd".

According to the company, authorities in the state where its main Indian plant is based allege that handsets from the Chennai plant were not exported but instead sold in India, thereby taking an illegitimate tax advantage.

"Nokia considers the claim to be completely without merit and counter to domestic tax laws," a company spokesman said.

Nokia said it had filed a writ with the Madras High Court to contest the claim from Tamil Nadu's tax department, and expected a hearing on the case next week.

It also brushed off suggestions the new case would complicate its €5.4-billion deal to sell its phone business to Microsoft Corp.

Nokia has said it expects to close the Microsoft deal by the end of this month.

India's Supreme Court, in a broader tax dispute regarding the Chennai plant, last week ordered the Finnish company to give a Rs3,500-crore guarantee and waive some of its rights to legal defence before it transfers the factory to Microsoft.

The company spokesman said Nokia was still considering its options over the Supreme Court ruling regarding the plant, one of its biggest handset factories.