In a significant case, the Bombay High court quashed the demand of ineligible Cenvat credit against Tata teleservices and held that no service tax on telecom towers erected at the site and affixed to earth.
P. S. Cardozo wit, Sangeeta Yadav are the counsel appeared for the appellant/Revenue and Prasad Parajape advocate appeared for the respondent/Assesee.
This is an appeal preferred under Section 35G of the Central Excise Act, 1944 by the Commissioner of Service Tax, impugning the order of the CESTAT passed by the Respondent.
The Respondent assessee-M/s Tata Teleservices (Maharashtra) Ltd., was registered with the Service Tax Department, Mumbai for providing taxable services under the category of ‘Telecommunication Services,
During the course of enquiry revenue found that Cenvat Credit was being availed on prefabricated buildings, shelters and PUF panels falling under Chapter heading 9406, which were used for housing/storage of generating sets and other components/equipment/spares.
And it was found that the assessee had wrongly availed the Cenvat Credit wrongly towards payment of service tax and education cess on the output services. Several show cause notice was issued against the assessee upon the above matter but it was adjudicated by the Commissioner, Service Tax-II.
Against the order, revenue filed an appeal before Customs, Excise and Service Tax Appellate Tribunal and they set aside the penalties made by the revenue on the assessee. Against the order of CESTAT revenue filed an appeal before the High court.
Counsel for the appellant/Revenue contended that,
“Since the telecom towers erected at the site and affixed to earth were not goods, the activity of erection of towers did not amount to manufacture. That as the towers so erected were neither excisable goods nor any output service defined under the provisions of the Finance Act, 1994, they attracted neither levy of Central Excise Duty under the provisions of Central Excise Act, 1944 nor Service Tax”.
Counsel for the Respondent/assessee submits that,
“The matter is squarely covered by the decision of this Court dated 2nd April 2018 passed in CEXA no. 6 of 2017 and the same order be passed in the present case as well”.
The division bench of Justice Dhiraj Singh Thakur and Abhay Ahuja dismissed the writ petition and determined that “The affidavit filed on behalf of the Revenue did not elicit any distinguishing feature. Counsel for the Revenue has also not brought any material on record to demonstrate that the decision dated 2nd April 2018 in CEXA 6 of 2017 has been a subject matter of any further challenge.
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