BrahMos Aerospace—a joint venture by DRDO and NPO Mashinostroyenia of Russia—was meant to design, develop, produce and market BrahMos cruise missile
The Bombay High Court on Tuesday quashed and set aside a demand order issued to BrahMos Aerospace Pvt Ltd by the Maharashtra Sales Tax department, demanding Rs 117.78 crore as inter-state sales tax.
BrahMos Aerospace—a joint venture by Defence Research and Development Organisation (DRDO) and NPO Mashinostroyenia of Russia—was meant to design, develop, produce and market BrahMos cruise missile.
The department, by an order dated August 17, 2015 for the assessment year 2012-2013, demanded that since BrahMos was storing most of the missile parts, including the warhead supplied to the Indian Armed Forces at its Nagpur branch, is bound to pay sales tax to the state. Also, the company, which has a manufacturing unit in Hyderabad, was executing the sale of the final product from Nagpur, it pointed out.
The company rejected the demand claiming that until the Hyderabad manufacturing unit was ready in 2007-2008, it was directly importing missile parts from Russia. The warheads alone were brought to Nagpur, as it could not be taken to Hyderabad unit, which is located in a civilian area.
Senior advocate V Sridharan, who represented BrahMos, also argued that the orders for supply are received in New Delhi, missiles are recanistered/developed in Hyderabad and only fitting of warhead is carried out in Nagpur.
The court, after going through the provisions of the Central Sales Tax Act and facts of the case, said, "The assumption of the assessing officer overlooks the fact that the warhead is a complete unit when imported from Russia." The division bench, consisting of Justice SC Dharmadhikari and Justice BP Colabawala, termed the order by the assessing authority 'erroneous' and quashed and set aside the Sales Tax department order.
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