In a significant development for Antrix Corporation Ltd., the Supreme Court of India has stayed a demand for ₹317 crore in Value Added Tax (VAT) from the Karnataka VAT department. Antrix is the commercial arm of the Indian Space Research Organisation (ISRO). The demand concerned tax liabilities for the period between 2008 and 2014.

The order, delivered on Thursday, June 12, 2025, by a bench of Justices, came in response to Antrix's argument that it had already paid service tax to the central government for the transactions in question. Additional Solicitor General N Venkatraman, representing Antrix, informed the court that the Karnataka VAT department's notice, issued on June 9, demanding payment within two weeks was unwarranted, especially with the challenge to the tax demand already pending before the Supreme Court for an extended period.

Venkatraman further clarified that Antrix had cleared its previous dues by paying service tax to the central government for these transactions. He argued that if the court ultimately ruled that the services were liable for VAT, the central government would then be obligated to refund the service tax, which could then be paid to the Karnataka VAT department.

The bench, recognizing the potential for double taxation, stayed the June 9 demand notice, asserting that the PSU should not be subjected to both service tax and VAT for the same transactions. The court has directed the Karnataka VAT department to file its response to the interim application submitted by Antrix.

The core issue revolves around whether the lease charges that Antrix received from various consumers for providing access to transponders on satellites constitute a taxable sale under the Karnataka VAT Act of 2003. A prior ruling by the High Court concerning the assessment period of 2005-2008 had determined that the services rendered by Antrix were subject to VAT, setting the stage for the current dispute.

This stay order provides temporary relief to Antrix Corporation, preventing the immediate enforcement of the ₹317 crore tax liability. It also highlights the complex legal and factual questions surrounding the taxation of technology and infrastructure sectors, specifically concerning the leasing of satellite transponder capacity. The outcome of this case could have broader implications for the tax treatment of similar leasing transactions within the telecom and satellite industries. The Supreme Court's intervention signals a cautious approach to interpreting tax laws in these evolving sectors and underscores the necessity for thorough judicial review before tax authorities take enforcement actions.