Rs 201 crore That's how much Isro owes in unpaid taxes

Space organisation's commercial wing tries to wriggle out of paying VAT saying leasing a facility is a service, not a sale. But court says, nothing doing

Space organisation's commercial wing tries to wriggle out of paying VAT saying leasing a facility is a service, not a sale. But court says, nothing doing

The state commercial tax department has asked Isro to cough up Rs 201 crore as value added tax, a decision that has been upheld by the Karnataka High Court.

The Isro centre at Byalalu

The Indian Space Research Organisation's (Isro) commercial wing, Antrix Corporation, leases out transponders carried by Indian satellites to private and public broadcasters to uplink and downlink signals.

Antrix, which generates huge revenue by leasing the facility, has not paid Value Added Tax (VAT) to the state government, reveal commercial tax department investigations.u00a0 The department investigated the case for about a year.

Antrix's transactions between 2005 and 2008 revealed that unpaid VAT amounted to about Rs 158 crore under the KVAT Act 2003. Interest and penalty together make it a whopping Rs 201 crore.

"It's the first time we've handled such a case," said a top official in the department.

In court

Antrix took the case to the High Court, objectingu00a0 on two grounds: It questioned the commercial tax department's jurisdiction and argued that leasing the transponder facility was a service and therefore, attracted service not sales tax.

But the commercial tax department said Isro, Antrix and the Master Control Facility in Hassan from where the process is controlled, all exist in Karnataka. This brings it within the department's jurisdiction.

Secondly, commercial tax officers justified the taxing by defining the word 'sale' in Section 29 (d) of KVAT Act 2003. "A section in the act clearly states that leasing out facility for a commercial purpose amounts to sale," said a senior commercial tax department official.

Setback

A high court bench headed by Justice Shailendra Kumar dismissed the petition filed by Antrixu00a0 on March 6.u00a0 The court directed Antrix to file an appeal before the joint commissioner of commercial tax (appeal) by availing the alternative remedy available under the act.u00a0

Ashok Harnalli, additional advocate general to the state government, said the "argument of rendering service didn't hold good as tax is levied on the grounds that Antrix leases its facility and collects rental. Moreover, they call themselves a commercial wing." Srinivas Rao, an Antrix official, refused to comment.

A high
This is said to be the highest sum ever levied by a state government officer on a company. Commissioner of commercial taxes B A Harish Gowda and officials Siddaiah and Thontadarya are behind the investigation.
Thontadarya had earlier taxed Antrix Rs 9 crore in a similar case. It took him a year to build up the case, said sources.u00a0