Supreme Court stays ₹317 crore VAT demand on Antrix over satellite transponder charges

The Supreme Court recently stayed a tax recovery demand of ₹317.5 crores raised by the Karnataka Commercial Taxes Department from Antrix Corporation Limited, the commercial arm of the Indian Space Research Organisation (ISRO) [Antrix Corporation Vs Assistant Commissioner of taxes (enforcement)]..The sum demanded from Antrix represents 50 per cent of a larger ₹634.89 crore Value Added Tax (VAT) demand made in relation to charges collected by the government-run company for leasing satellite transponder capacity for the period August 2008 to March 2014.The State government's June 9 endorsement called on Antrix to pay up the demanded sum (50 per cent, amounting to ₹317 crores) within seven days. Notably, in 2010, the top court had stayed a similar tax demand for the period from April 2005 and July 2008.Antrix eventually moved an interlocutory application seeking clarification on whether this earlier stay order would also cover the subsequent period of August 2008 to March 2014..The matter was heard by a Bench of Justices Prashant Kumar Mishra and Manmohan, which granted Antrix interim relief on June 12. "The subsequent demand has been raised for the period of July, 2008 to March, 2014. Even though this Court is in seisin of the matter," it noted. The Court proceeded to stay the enforcement of this demand until the next date of hearing and directed that the matter be listed in the second week of August..The case concerns whether Antrix’s leasing of satellite transponder capacity constitutes a “transfer of right to use goods” liable to VAT or a pure service already taxed under the service tax regime. Antrix—a wholly owned Government of India undertaking functioning under ISRO and the Department of Space—argues that it merely facilitates signal transmission for private clients, with the satellite itself remaining under the complete control of the government.The controversy spans two tax periods. For April 2005 to July 2008, VAT demands totalling ₹148.61 crore were raised despite Antrix having already paid ₹716.03 crore in service tax on the same consideration. The company challenged the VAT demands before the Karnataka High Court, which dismissed its appeal and ordered a deposit of ₹50 crore. The Supreme Court stayed recovery in May 2010, and those appeals remain pending..A similar dispute arose for the next period—August 2008 to March 2014—when VAT demands totalling ₹634.89 crore were raised. In 2016, the Karnataka High Court directed Antrix to deposit 50 per cent of this amount (₹317.5 crore), but no further action was taken for nearly a decade. In December 2024, the tax authorities revived the matter, seeking compliance with the 2016 High Court order and initiating recovery proceedings.Antrix responded by moving the Supreme Court on February 21, 2025, arguing that the earlier interim stay granted in 2010 should also apply to the later period. The company contended that it has always treated the satellite capacity as a service transaction liable to service tax - which has already been paid in full -and that any VAT levy would amount to double taxation. It also emphasised that the satellite infrastructure is owned, operated, and controlled by ISRO, and that no part of it is transferred to customers.In its appeal, Antrix also challenged the High Court’s finding that customers enjoy “legal control” over satellite transponders through frequency allocation. It cites the Supreme Court’s ruling in BSNL v. Union of India [(2006) 3 SCC 1], which held that mere access to a network does not constitute delivery or possession of goods. It further argues that Section 6(4) of the Karnataka VAT Act permits tax only if goods are used within the State—an inapplicable condition for satellites orbiting in space 36,000 km above Earth..The Karnataka authorities, however, maintained that the 2010 stay order applies only to the 2005–2008 period and that Antrix must comply with the High Court’s 50 per cent deposit direction for the later years. Their revival of enforcement measures in 2024–25—after nearly 15 years of dormancy—prompted the present intervention from the Supreme Court.The Court has now stayed the latest recovery proceedings and will hear the matter in August. The outcome is expected to clarify whether satellite-based commercial services attract VAT in addition to service tax, and whether government entities like Antrix enjoy any special leeway in such tax disputes..Antrix was represented by Additional Solicitor General (ASG) N Venkataraman with Advocates Chandrasekara Bharati and Shyam Gopal.The respondents were represented by Advocates Prateek Chadha, DL Chidananda, Rupesh Kumar, Gurmeet Singh Makker, Vivek Sarin, Aakarshan Aditya, Dhruv Dev Gupta, Divyanshi Singh, Satish C. KaushikVibhu Tiwari, Tarurag Gaur, Kamaldeep Dayal, Rishi Agrawala, Manu Krishnan, Vipul Singh, EC Agrawala, Kumar Visalaksh, Udit Jain and MP Devanath..[Read Judgment]