Andhra Pradesh High Court orders fresh assessment for US based offshore energy company under AP VAT Act

The High Court of Andhra Pradesh at Amaravati has set aside the assessment orders issued against US based M/s. Helix Energy Solutions Group Inc passed under the Andhra Pradesh Value Added Tax Act, 2005 (AP VAT Act) for the assessment years 2007–08 and 2008–09.

A bench comprising Justice R. Raghunandan Rao and Justice T.C.D. Sekhar, delivered a common order on 10 December 2025 and remanded the matter to the assessing authority for fresh consideration.

M/s Helix, incorporated in the United States of America, had entered into a sub-sea constructions and diving contract in 2006 with M/s. Allseas Marine Contractors S.A, for on off shore Gas field, developed by M/s. Reliance Industries Limited, in the Krishna Godavari Basin situated in the Bay of Bengal.

The contract awarded to it, was for laying a pipeline on the ocean floor, including installation of various sub-sea constructions like suction pipes, manifolds, Christmas trees, rigid jumpers, tying spools and infield umbilical lines etc. Under the contract the material, mentioned above was to be supplied by M/s. Allseas Marine Contractors and the petitioner was required to carry out engineering, planning and fabrication activities in relation to the installation of the sub-sea constructions.

It is Helix's contention that about 80% of its work was done beyond 12 Nautical miles from the coast of Andhra Pradesh. On the ground that less than 1% of the value of the contract involved transfer of goods, Helix had approached the Commercial Tax Officer, Jagganayakpur Division, Kakinada, for quantification of taxable turnover for the purposes of deduction of tax at source.

After proceedings were initiated by CTO Kakinada, it rejected the accounts produced by Helix, on the ground that these were not a complete set of accounts and that the books of account, required to be maintained, under the Income Tax Act, 1961 was not produced.

This order was set aside and a fresh consideration was ordered. Helix then filed month wise details of expenses incurred as per Rule-31 and copies of contracts etc obtained from vendors. At that stage, the CTO again issued a notice, dated 29.10.2009, proposing to levy tax of Rs.19,01,11,662/- and Rs.60,74,59,981/-, for the assessment years 2007-08 & 2008-09 respectively. The 1st respondent, issued this notice, on the ground that the petitioner had failed to produce the books of accounts and consequently, the entire turnover would have to be taxed at 12.5% after allowing a deduction of 30% under Rule 17(1)(g) of the APVAT Rules.

It is Helix's case that it had produced all its accounts, however, instead of going through the said accounts, to satisfy himself, on the turnover which would be exigible to tax, CTO had arbitrarily rejected all the accounts and the documents produced by it and proceeded to complete the assessment by invoking the Rule-17(1)(g) of the APVAT Rules. Under the said Rule, the assessment authority, in the absences of books and accounts of a dealer, is entitled to levy tax on 70% of the disclosed turnover after giving a standard deduction of 30%.

High Court found that the only option available to it was to remand the matter back to the assessing authority to give an opportunity to Helix to submit the entire records.

"Upon such production of the records, the 1st respondent shall then decide whether the said material is sufficient to account for all the material/goods which are being incorporated into the works contract by the petitioner for the relevant period. In the event, the 1st respondent is satisfied with the material produced by the petitioner, the assessment proceedings can be completed on the basis of such material. In the event, the 1st respondent comes to the opinion that the accounts produced by the petitioner do not meet the requirements of Rule 31, it would be open to the 1st respondent to specifically set out the missing details and material which is required by the 1st respondent to complete the assessment proceedings. The petitioner would be required to make good such deficit of accounts, failing which, it would be open to the 1st respondent to invoke Rule 17 (1)(g) of the A.P.VAT Rules. relating to the works contract executed by the petitioner", the High Court order states.

Senior Advocate V. Sridharan and Advocate Kadimisetty Sai Sreenadh appeared for the petitioners.

Case Title: M/S.HELIX ENERGY SOLUTIONS GROUP INC. vs. THE COMMERCIAL TAX OFFICER KAKAINADA

Order date: December 10, 2025

Bench: Justice R. Raghunandan Rao and Justice T.C.D. Sekhar