diff --git a/api/base_controller.go b/api/base_controller.go
index 50e2f6c8f..8dfe9c4a3 100644
--- a/api/base_controller.go
+++ b/api/base_controller.go
@@ -20,14 +20,13 @@ import (
 	"context"
 	"encoding/base64"
 	"fmt"
+	"github.com/tidwall/sjson"
 	"net/http"
 	"strconv"
 	"time"
 
 	"github.com/Peripli/service-manager/operations"
 
-	"github.com/tidwall/sjson"
-
 	"github.com/gofrs/uuid"
 
 	"github.com/Peripli/service-manager/storage"
@@ -498,6 +497,9 @@ func (c *BaseController) PatchObject(r *web.Request) (*web.Response, error) {
 	createdAt := objFromDB.GetCreatedAt()
 	updatedAt := objFromDB.GetUpdatedAt()
 
+	labels, _, _ := query.ApplyLabelChangesToLabels(labelChanges, objFromDB.GetLabels())
+	objFromDB.SetLabels(labels)
+
 	if err := util.BytesToObject(r.Body, objFromDB); err != nil {
 		return nil, err
 	}
@@ -507,9 +509,6 @@ func (c *BaseController) PatchObject(r *web.Request) (*web.Response, error) {
 	objFromDB.SetUpdatedAt(updatedAt)
 	objFromDB.SetReady(true)
 
-	labels, _, _ := query.ApplyLabelChangesToLabels(labelChanges, objFromDB.GetLabels())
-	objFromDB.SetLabels(labels)
-
 	action := func(ctx context.Context, repository storage.Repository) (types.Object, error) {
 		object, err := repository.Update(ctx, objFromDB, labelChanges, criteria...)
 		return object, util.HandleStorageError(err, c.objectType.String())
diff --git a/test/service_instance_and_binding_test/service_instance_test/service_instance_test.go b/test/service_instance_and_binding_test/service_instance_test/service_instance_test.go
index 7c38ab5b8..3e6eeb097 100644
--- a/test/service_instance_and_binding_test/service_instance_test/service_instance_test.go
+++ b/test/service_instance_and_binding_test/service_instance_test/service_instance_test.go
@@ -2092,6 +2092,27 @@ var _ = DescribeTestsFor(TestCase{
 										Expect(method).To(Not(Equal("PATCH")))
 									})
 								})
+								When("invalid label key", func() {
+									It("returns error", func() {
+										labels := []*types.LabelChange{
+											{
+												Operation: types.AddLabelOperation,
+												Key:       "label Key1",
+												Values:    []string{"labelValue1"},
+											},
+										}
+										patchLabelsBody = make(map[string]interface{})
+										patchLabelsBody["labels"] = labels
+										testCtx.SMWithOAuthForTenant.PATCH(web.ServiceInstancesURL+"/"+SID).
+											WithQuery("async", "false").
+											WithJSON(patchLabelsBody).Expect().Status(http.StatusBadRequest)
+
+										testCtx.SMWithOAuthForTenant.PATCH(web.ServiceInstancesURL+"/"+SID).
+											WithQuery("async", "false").
+											WithJSON(patchLabelsBody).Expect().Status(http.StatusBadRequest)
+
+									})
+								})
 								When("name and label is provided in request body", func() {
 									It("returns 404", func() {
 										patchLabelsBody["name"] = "name"