A day after the Tamil Nadu Government slapped a Rs.2,400 crore tax notice on Nokia, Indian Cellular Association (ICA) has termed the step as “unconstitutional” and “totally violative of the due process of law”. It has urged Chief Minister Jayalalithaa to reverse the “unwarranted” actions of her officers.

“We are writing this letter to you in extreme distress. An urgent appeal to you...to kindly ensure that the process of law is not vitiated. The reputation of TN as a well governed State in under attack...We are very sorry to point out that some officers of your government in VAT dept seem to have taken some unwarranted actions.

They have issued demand of huge VAT and hundreds of crores in export cases. This is unconstitutional and totally violative of the due process of law,” ICA said in its letter to Ms. Jayalalithaa.

Stating that such a step would send wrong signals to investors globally, ICA President Pankaj Mohindroo said the Sri Perumbudur factory of the Finnish mobile manufacturer was a matter great pride to Tamilians as well as Indians. “It is the world's largest mobile phone factory with unparalleled value addition and (which provides) employment to the larger community, specially young women,” he said.

The ICA has also pointed out that exports were not leviable to VAT anywhere in the world, including India, and this is specially so in SEZ where the entire production is to be exported under customs bond. “Exports are under Central Government while local sales are with State VAT dept,” it said and urged the Tamil Nadu Chief Minister to take “urgent emergent action in having the matter examined and status quo restored”.

Nokia had on Friday said that it has filed a writ in the Madras High Court to contest the Tamil Nadu tax authorities' claim. “Nokia considers the claim to be completely without merit and counter to domestic tax laws. In India, exports are by law exempt from tax, and Nokia has proved consistently that devices produced at Chennai are exported abroad,” it had said.

“It is absurd that the Tamil Nadu tax authority is now claiming that devices made in Chennai were not exported and were instead sold domestically in India. We contend that this allegation has no basis in reality whatsoever; it could easily be rebuffed by a check of documentation provided to various governmental departments including Customs,” the company added.