On 12 December 2013 Delhi High Court granted an order releasing certain assets of Nokia – including a factory in Chennai – that had been frozen by Indian tax authorities in a dispute over taxes. In granting the order, the court also removed a serious stumbling block in the sale of the Finnish company’s global devices and services business to Microsoft.
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Nokia India has been involved in a dispute with India’s tax authorities since a survey carried out in January 2013 led to the reopening of tax assessments from 2006-07. As a result, the company faces potential tax liabilities of around ₹40 billion (US$65 million). Appeals on the matter are pending before the Income Tax Appellate Tribunal.
On 25 September 2013 the tax authorities seized certain assets and bank accounts of Nokia India, including a factory in Chennai that employs around 8,000 people. The factory is due to be transferred to Microsoft as part of a US$7.2 billion deal reached in early September for Microsoft to acquire Nokia’s devices and services business.
Nokia had argued before Delhi High Court that if Microsoft was not allowed to acquire its assets in India it would have to wind up manufacturing operations in the country, which would jeopardize the jobs of its Indian employees.
While allowing the sale of Nokia’s assets to Microsoft, Delhi High Court ordered Nokia to deposit ₹22.5 billion in an escrow account and also said that Microsoft “will not be liable to pay tax dues of Nokia India and Nokia Finland”.
Delhi-based law firm Luthra & Luthra represented Nokia in Delhi High Court. The Luthra team that argued the case included partners Vikas Srivastava and JP Singh, managing associate Manu Yadav, and associates Parag Mohanty, Leenshwari Makhijani, Aditi Goyal and Varsha Bhattacharya.
Srivastava, who heads Luthra & Luthra’s tax practice, told India Business Law Journal that Nokia moved its tax work to Luthra & Luthra last January when “the tax litigation work became serious”.
Mohan Parasaran, the solicitor general of India, represented the tax authorities.
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