The Allahabad Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has held that Dish TV is entitled to 100% credit as the set top boxes satisfy the definition of ‘Inputs’.
The two-member bench of P. K. Choudhary ( Judicial Member ) and Sanjiv Srivastava (Technical Member) has observed that the set-top boxes satisfy the definition of inputs as they are goods used by the output service provider for the provision of the output services. There cannot be any fallacy in the stands taken by the appellant in taking the entire credit at the time of receipt of these set-top boxes as inputs.
M/s Dish TV India Ltd, the appellant or assessee is engaged in providing output services under the category of broadcasting services. They were availing of the facility of Cenvat credit. During the audit, it was observed that the appellant has been taking credit for the set-top boxes provided by them to their customers for receiving the signals, and credit was taken by the appellant for treating them as input.
The goods being classifiable under Chapter 85 were covered by the definition of capital goods, and thus the act of taking 100% credit immediately upon receipt of the goods was not proper, and only 50% of the credit should have been taken during that financial year, and the next 50% should have been gone to the next financial year.
It was contended that the appellant has taken credit for the set-top boxes by treating them as inputs, as there is no restriction in the definition as per Rule 2(k) of the Cenvat Credit Rules, 2004, which excludes the set-top boxes from the definition of inputs. The set top boxes have been used by the appellant for providing the output services and are hence correctly covered under the definition of input.
The Department wanted to put the goods under the category of capital goods only for the reason that these goods have been capitalized in their book of accounts and depreciation claimed for income tax. The term “input” is defined under Rule 2(k) of the CENVAT Credit Rules, 2004. Input has been defined for an output service provider.
The tribunal held that there are no reasons why the goods could not have been treated as input for the provision of the output services by the appellant. It is a well-settled principle in the law that the taxing statute needs to be construed strictly according to the words and phrases used in the statute. There can be no other interpretation when the literal interpretation is unambiguous.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
