The apex court has told Nokia to submit an undertaking to assure tax liability payment before it can transfer one of its largest phone factories to Microsoft.
In a big blow to Nokia, the Supreme Court on Friday dismissed the company's special leave petition in Rs 21,153-crore tax liability case, upholding the Delhi High Court order.
Nokia Finland will have to submit an undertaking that in case there is going to be a tax liability in future which Nokia is not going to satisfy at this stage then it will be willing to pay that money – which sources indicate Nokia is not in favour of doing.
After the hearing concluded, several people from Nokia said the handset maker may have to shut down the Chennai plant – one of its largest phone factories - in view of the fact that Nokia Finland does not want to submit an undertaking and the Delhi HC had ordered that the property can only be transferred to Microsoft by Nokia after all the conditions have been fulfilled, one of which is that there should be a letter of guarantee from Nokia Finland. This spells trouble ahead for Nokia India. Nokia has indicated in the past that for the next one year atleast they will be winding up their operations if at all in a transitory manner.
The apex court has said that Nokia has not given any new proposal on the tax issue.
Last year in September, the US-based firm had announced it will acquire almost all of the devices and services business of Nokia for USD 7.2 billion.
The Supreme Court had said on Thursday that it wants to find some sort of an amicable solution that is acceptable to both Nokia and the Income Tax (I-T) department and that it wants to protect the interests of both the parties. For this, Nokia has been asked to submit a report of valuation of its India entities because the Supreme Court wants to make sure that even after the Microsoft deal goes through , there is sufficient amount that can secure the interests of the I-T department.
Reacting post the Supreme Court order, Nokia in a statement released said the company is disappointed by the apex court's verdict.
Nokia believes that the offer it made to pay over Rs 2,250 crore was fair for all sides. It regrets the anxiety caused to all its employees due to the extended legal process. The company will now consider its future steps.
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