Supreme Court asks Antrix to pay Rs 50 crore as tax

Hearing a special leave petition (SLP 6288/ 2010-6291/2010) by ACL, which had moved the Apex Court challenging the order of the High Court that the leasing of transponder to private television channels is liable for taxes, the division bench comprising Justices S H Kapadia and Swathanthra Kumar has directed the ACl to implement the impugned order of the Karnataka High Court.

First of its kind order

In a first of its kind order, the bench, according to the sources, orally observed: “ In an era of advancement of science and technology, it is understood that tax can be levied on sales and services of extra territorial produce. The Court needs to look into these aspects too,”

With this order, new avenues of taxation have opened up for the Karnataka Commercial Tax Department (KCTD), which will fetch it an additional revenue of Rs 10 crore every month.

It could be recalled that the High Court division bench comprising Justices V Gopala Gowda and B V Nagarathna on February 6 had stated that the Karnataka Value Added Tax (VAT) applies to the lease of transponder to television channels.

Tax levied

The KCTD had levied a tax on the ACL, which ran up to Rs 150 crore, and the order was served on the Company on December 26, 2008.  However the Antrix moved the High Court challenging the order, which was  dismissed by the single judge. The company appealed against dismissal.

While the Company claimed that the transaction does not amount to leasing as it was a not a commercial venture, the KCTD contended that it was of commercial nature as the private organisations sign a contract with ISRO’s commercial wing.

The division bench upheld the reassessment order saying that the space segment capacity constitutes goods and there is transfer of right to use the specified bandwidth to the lessees for consideration.