Supreme Court Halts ₹317.5 Crore VAT Recovery Against Antrix Over Satellite Transponder Lease
Supreme Court Halts ₹317.5 Crore VAT Recovery Against Antrix Over Satellite Transponder Lease
The Supreme Court of India stayed a Rs. 317.5 crore VAT demand raised by the Karnataka Commercial Taxes Department against Antrix Corporation Ltd., the commercial arm of ISRO, in a dispute concerning the tax treatment of satellite transponder lease charges.
The Karnataka tax authorities had raised VAT demands totalling Rs. 634.89 crore for the period from August 2008 to March 2014, claiming that Antrix's leasing of satellite transponder capacity amounted to a “transfer of right to use goods” liable to VAT under the state law.
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In 2016, the Karnataka High Court had directed Antrix to deposit 50% of this demand (Rs.317.5 crore), but enforcement was not pursued until December 2024, when the department revived the recovery proceedings by issuing a fresh endorsement on June 9, 2025.
Antrix challenged the revival of the demand before the Supreme Court, seeking clarification on whether the Court’s earlier interim stay granted in 2010 for a similar VAT demand relating to the April 2005-July 2008 period would also apply to the subsequent period.
The petitioner’s counsel argued that it had already paid Rs. 716.03 crore in service tax for the same services and that imposing VAT would amount to double taxation. They argued that the satellite transponder capacity merely facilitated signal transmission, without any transfer of ownership or control to clients, and therefore constituted a service, not a sale of goods.
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They relied on the Supreme Court’s ruling in BSNL v. Union of India (2006), which held that mere access to a network does not amount to transfer of goods, and argued that satellite use in outer space (36,000 km above Earth) could not be said to constitute use of goods within Karnataka, as required under Section 6(4) of the Karnataka VAT Act.
On the other hand, the Government’s counsel argued that the 2010 stay order only applied to the earlier period and that Antrix was bound to comply with the High Court’s direction to deposit 50% of the demand for the later period. They argued that Antrix’s clients effectively exercised legal control over transponders through frequency allocation, making the transaction a deemed sale.
The bench comprising Justices Prashant Kumar Mishra and Manmohan stayed the June 2025 recovery notice and took the Karnataka government’s endorsement on record. The court observed that the matter was already pending and under its consideration. It issued notice on Antrix’s interlocutory application and listed the appeals for hearing in the second week of August.
The court’s interim order provides temporary relief to Antrix while keeping open the larger question of whether leasing satellite transponder capacity constitutes a service or a sale under VAT law. The outcome is expected to have huge implications for the taxation of satellite-based services and the balance between central and state tax regimes.1212
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