Court Emphasizes Strategic Importance of Space Programs, Orders Fresh Determination of Tax Liability
In a significant judgment, the Andhra Pradesh High Court has set aside the tax assessment orders against the Satish Dhawan Space Centre (SHAR), a part of the Indian Space Research Organisation (ISRO), and remanded the matter back to the Assessing Authority for a fresh determination. The division bench comprising Justices R. Raghunandan Rao and T.C.D. Sekhar delivered the judgment on June 22, 2026, in response to a writ petition filed by the space center, challenging the orders based on 'Best Judgment Assessment.'
The dispute arose from assessment orders for the periods 2007-08 to 2011-12, where the Commercial Tax Officer applied a 12.5% tax rate on works contracts awarded by SHAR, despite the petitioner's contention that a 4% rate was applicable. The petitioner argued improper service of notices and an incorrect tax rate, further alleging that they approached the wrong authority for revision.
Highlighting the strategic importance of ISRO's space programs, the court noted that taxing such institutions could harm national interests. The bench found doubts regarding the service of notices and recognized that while SHAR approached the wrong authority, their intent to seek relief was clear.
The court ordered that the assessment orders dated August 14, 2012, be set aside, directing the Assessing Authority to reassess the tax liability after proper notice and opportunity to the petitioner. The proceedings are to be completed within three months from the order's receipt.
This ruling underscores the judicial recognition of the pivotal role played by institutions like ISRO in national development and the careful consideration needed in their fiscal matters.
Bottom line:-
Assessment orders passed on the basis of 'Best Judgment Assessment' were challenged on grounds of improper service of notices, incorrect rate of tax, and approaching the wrong authority for revision. Court remanded the matter back to the Assessing Authority for fresh determination, emphasizing the strategic importance of the petitioner's space programs.
Statutory provision(s): Andhra Pradesh VAT Act, 2005, Section 32
Satish Dhawan Space Centre-SHAR v. State of A.P., (Andhra Pradesh)(DB) : Law Finder Doc id # 2935819
