03-21-2010, 11:58 AM
Should the lease of satellite transponders at 36,000 km up there in sky be charged a value added tax on ground? That is the issue for which Antrix Corporation Ltd, ISRO's (Indian Space Research Organisation) commercial arm, has dragged the Karnataka Commercial Taxes Department to courts.
The matter now awaits final order in the Supreme Court.
Depending on which way the verdict goes, Antrix faces a dent in its earnings and stands to lose over Rs 201 crore in arrears and penalty for the period from April 2005 to July 2008 under the Karnataka Value Added Tax Act 2003.
And tax officials, who insist that transponder lease can be taxed as any other goods, believe they have unearthed a new stream of income of around Rs 10 crore a month. They are also apparently eyeing the unassessed period from August 2008.
Pending the last word, a division bench of the apex court earlier this week asked Antrix to deposit Rs 50 crore with the State department by March 31 this year.
Both Mr Pradeep Singh Kharola, Commissioner of Commercial Taxes, Karnataka, and Mr K. R. Sridhara Murthi, Managing Director of Antrix, separately refused to comment on the matter.
Transponder lease, Mr Murthi had earlier said in a different context, is a main revenue source for Antrix and fetches almost a half of it each year.
At least a dozen public, private television and DTH operators, besides VSAT owners hire satellite capacity for communication and broadcast activities. Antrix had a turnover of Rs 950 crore for 2008-09.
In 2005, DTH player Tata Sky alone leased 12 Ku-band transponders on Insat-4A, and holds the single largest commercial lease on a domestic satellite. Intelsat, the largest satellite fleet owner, also renewed the lease of three Insat transponders last year. Each transponder lease earns for Antrix Rs 4-5 crore a year through the 12-year life of a satellite. A new capacity lease can come up whenever a new Insat communications satellite is launched. "This is the first time in the history of taxation [in the country] that such a levy has been made. The place of signing the agreement is the place of sale," which attracts value added tax, said an official, requesting not to be named. Antrix contends that such a tax is unknown in other countries and it already pays a significant service tax of Rs 70-75 crore a year, which goes to the Centre. The commercial taxes department first claimed unpaid VAT arrears of Rs 158 crore - plus penalty and interest and served an order on Antrix in December, 2008. Antrix challenged the order in the Karnataka High Court, where a single judge dismissed its case. This was appealed. A division bench again upheld the order on February 6 this year, and asked Antrix to pay up 25 per cent (Rs 50 crore) of the dues to the KCTD. Antrix further filed a special leave petition in the Supreme Court. A division bench comprising Mr Justice S. H. Kapadia and Mr Justice Swatanter Kumar directed it to make the deposit pending the judgement.
Source: The Hindu Business Line
The matter now awaits final order in the Supreme Court.
Depending on which way the verdict goes, Antrix faces a dent in its earnings and stands to lose over Rs 201 crore in arrears and penalty for the period from April 2005 to July 2008 under the Karnataka Value Added Tax Act 2003.
And tax officials, who insist that transponder lease can be taxed as any other goods, believe they have unearthed a new stream of income of around Rs 10 crore a month. They are also apparently eyeing the unassessed period from August 2008.
Pending the last word, a division bench of the apex court earlier this week asked Antrix to deposit Rs 50 crore with the State department by March 31 this year.
Both Mr Pradeep Singh Kharola, Commissioner of Commercial Taxes, Karnataka, and Mr K. R. Sridhara Murthi, Managing Director of Antrix, separately refused to comment on the matter.
Transponder lease, Mr Murthi had earlier said in a different context, is a main revenue source for Antrix and fetches almost a half of it each year.
At least a dozen public, private television and DTH operators, besides VSAT owners hire satellite capacity for communication and broadcast activities. Antrix had a turnover of Rs 950 crore for 2008-09.
In 2005, DTH player Tata Sky alone leased 12 Ku-band transponders on Insat-4A, and holds the single largest commercial lease on a domestic satellite. Intelsat, the largest satellite fleet owner, also renewed the lease of three Insat transponders last year. Each transponder lease earns for Antrix Rs 4-5 crore a year through the 12-year life of a satellite. A new capacity lease can come up whenever a new Insat communications satellite is launched. "This is the first time in the history of taxation [in the country] that such a levy has been made. The place of signing the agreement is the place of sale," which attracts value added tax, said an official, requesting not to be named. Antrix contends that such a tax is unknown in other countries and it already pays a significant service tax of Rs 70-75 crore a year, which goes to the Centre. The commercial taxes department first claimed unpaid VAT arrears of Rs 158 crore - plus penalty and interest and served an order on Antrix in December, 2008. Antrix challenged the order in the Karnataka High Court, where a single judge dismissed its case. This was appealed. A division bench again upheld the order on February 6 this year, and asked Antrix to pay up 25 per cent (Rs 50 crore) of the dues to the KCTD. Antrix further filed a special leave petition in the Supreme Court. A division bench comprising Mr Justice S. H. Kapadia and Mr Justice Swatanter Kumar directed it to make the deposit pending the judgement.
Source: The Hindu Business Line
