Nokia has filed a petition with the Supreme Court seeking permission to transfer its mobile phone manufacturing unit in Chennai to Microsoft.

Nokia’s move follows the Delhi High Court ruling asking the company to waive off all rights to challenge the final order with regard to the tax dispute. According to Nokia, the High Court’s order is not aligned with international treaties and practices, and would restrict the company’s ability to contest tax authority’s actions locally and internationally.

Earlier, the Department of Income Tax had sent notices to Nokia Corporation and Nokia India for withholding tax on royalty payments. Subsequently, Nokia and the government had reached an agreement to settle the tax issue to facilitate transfer of its assets to Microsoft. As part of the agreement, Nokia had agreed to deposit Rs 2.25 billion in escrow along with committing to an additional capped undertaking for Nokia India’s final tax liabilities. However, the company has now stated that it could not agree to the conditions laid down by the High Court which would mean waving off its legal rights.

The ongoing tax dispute could impact the Nokia-Microsoft deal. Earlier, under an agreement signed with Microsoft, Nokia had committed to transfer its global assets to the former by December 12, 2013.