Nokia Tax Evasion Case

The Income Tax department has served a more than Rs 2,000 crore demand notice on Finnish mobile firm maker Nokia for alleged evasion of taxes in its business transactions in the country.

The department had on March 15 asked the firm to submit the tax demand of over Rs 2,000 crore which has been temporarily stayed by the Delhi High court in view of an appeal filed by the firm regarding the time period set by the department to furnish the stated tax demand, Income Tax sources said today.

Nokia confirmed receiving the notice and said it is in "full compliance" with laws related to its business operations.

"Nokia confirms it has received an order from Indian tax officials. 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.

"In this regard, Nokia filed a writ before the Delhi High Court last week and on Friday, March 22 the Court has issued notice to the Income Tax department to file its counter affidavit and has granted interim stay of the entire tax demand raised against Nokia till further orders," a Nokia spokesperson said.

The Income Tax department will file its reply on or before April 10 in the Delhi High Court stating that it has issued the notices under sections that "enable and authorize" it to issue such a time-bound notice, department sources said.

The seven notices, from financial year 2006-2012, have stipulated a varied time period of 5 days to a month in order to ensure that the "interest of revenue" is upheld in this case.

The notice has been issued by the Income Tax department after it completed its probe and had conducted a 'survey' operation on the premises of the Chennai in January this year.

The tax evasion, according to Income Tax department sources, pertains to royalty payment made against supply of software by the company's parent company which attracts a 10 per cent tax deduction under the Tax Deducted at Source (TDS) category.

During the hearing of Nokia's appeal in the Delhi High Court, the department had called this case as that of a "contumacious default" that has been in place since January 2006 by Nokia India Private Limited (NIPL).

"If allowed more time Ms NIPL will assuredly 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...," the I-T had contended.

The counsel for NIPL had stated that there was no intention of the company to "evade any taxes in India".

The court order also stated that Nokia has assured that it "shall not be transferring/remitting any funds outside India except in the normal course of business till the next date of hearing."

The department, according to sources, has issued the tax demand notices after it had analyzed the company's business statements since 2006.