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CESTAT grants Cenvat Relief to Vodafone [Read Order]

CESTAT - Vodafone - Cenvat - Vodafone - Taxscan

The Customs, Excises, Service Taxes Appellate Tribunal (CESTAT) held that the Vodafone is not required to reverse Cenvat credit as the capital goods have not been physically removed from the premises where they were initially installed.

The appellant, M/s. Vodafone Mobile Services Limited is engaged in providing telecommunication services and availing credit on duty paid capital goods which were used for providing output service. The Delhi High Court sanctioned Scheme of Arrangement under Sections 391 and 394 of the Companies Act, 1956 whereby the “Passive Infrastructure Assets” Business of the appellant and 5 other entities of Vodafone group stood transferred and merged in Vodafone Infrastructure Limited, a group company of the appellant. Post such Scheme of Arrangement, the Passive Infrastructure Assets which stood transferred to Vodafone Infrastructure Limited continued to remain on the same premises and continued to be used by the appellant for providing telecommunication service.

A show-cause notice was issued to the appellant alleging that upon transfer and merger of the Passive Infrastructure Assets of the appellant to and in Vodafone Infrastructure Limited under the Scheme, the appellant was required to pay under Rule 3 (5) of the Cenvat Credit Rules, 2004, an amount equal to the credit availed in respect of capital goods which so stood transferred to Vodafone Infrastructure Limited. The matter was adjudicated, the demand under Rule 3 (5) of the Cenvat Credit Rules, 2004, was confirmed.

The tribunal consists of a Judicial Member, Ashok Jindal, and an Accountant Member, C.L. Mahar while relying on its earlier decision held that the Vodafone is not required to reverse Cenvat credit as the capital goods have not been physically removed from the premises where they were initially installed.

“We also take note of the fact that the whole of duty has been confirmed by invoking the extended period of limitation. We hold that the extended period of limitation is not invokable,” the tribunal said.

To Read the full text of the Order CLICK HERE
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