HC sets-aside TN Rs 2,400 crore tax notice on Nokia

In a relief to Finnish-handset maker Nokia, the Madras High Court today set-aside the Tamil Nadu Government's Rs 2,400 crore VAT demand and directed the authorities to review the tax assessment "afresh".
Justice B Rajendran who allowed the petitions filed by Nokia challenging the Sales Tax department assessment for period 2009-10, 2010-11, 2011-12 and slapping notice for Rs 2,400 crore TNVAT, set aside the order and directed the company to deposit 10 per cent of the tax demand amounting Rs 240 crore within eight weeks "as a precondition to review the assessments".
The Judge also directed the Deputy Commissioner (CT) of Enforcement (South) to give an opportunity to Nokia for hearing, peruse the documents and then pass orders on "merits" in accordance with law upholding the handset makers' contention that the order was passed without being heard.

The Judge, while declaring that the demand notices issued by the authorities are still valid, in his order said "the effect of quashing the assessment orders will not totally take away the right of the authorities to proceed further in this matter."
The Judge rejected the contention of Advocate General A L Somayaji that there was no need to give personal hearing and observed said "when such an opportunity of hearing is specifically sought, it has to be extended to the petitioner. Non-consideration of the same vitiates the impugned orders."
Tamil Nadu Government slapped the Rs 2,400 crore tax notice accusing Nokia of evading tax, but the company disputed the claim.

On March 28, Nokia moved the High Court and prayed for restraining the Sales Taxes Department from taking any coercive steps in any manner whatsoever in pursuance of the impugned order.
The state government had issued the notice to Nokia charging the company had been selling the products produced from Chennai plant to the domestic market, instead of shipping them overseas.
Nokia management had responded to the notice, saying that it was a "baseless" claim by the Sale Tax Department.