In a major relief to Vodafone Essar Digilink Ltd, the CESTAT, Chandigarh held that the Company is eligible for Cenvat credit on towers, shelters & prefabricated building etc.
In the instant case, the respondent- Company’s claim for cenvat credit on towers, shelters & prefabricated building etc., were denied by the department on ground that the said items are not covered within the definition of capital goods or inputs.
Relying on the decision of the Larger Bench of the Tribunal in the case of BSNL and others, the bench has held that Cenvat credit is not available on the above said items, as they have become immovable property and has affixed to the earth.
The bench accepted the contention of the Company that they were providing passive telecommunication services and paying service tax categorically on Business Auxiliary services or Business Support services. Therefore, they are entitled to take Cenvat Credit in the light of decision of GTL Infrastructure Ltd.
The bench said that Rule 2(K)(ii) is applicable to the present case. “As per Rule 2(k)(ii) of the Cenvat Credit Rules, 2004 all goods are entitled for Cenvat credit which are used for providing any output service. In this case nowhere it is disputed by any of the parties that the tower/BTS cabins were not used by the appellant for providing service namely Business Auxiliary Service. Therefore, the Cenvat Credit cannot be denied.”
It was noted that in the instant case, the intention of the appellant and their client (Operators) is to confer the Operators a right to install active infra network equipment including GSM Antenna and BTS equipment, and to extend and receive, highly specialized technical service, which includes the provision of creation and maintenance of highly controlled artificial temperatures and humidity levels at all times and continuous power supply at the prescribed voltage so as to operate the equipment of the operators, and thus be conducive to the functioning of the operators signal transmission for their ultimate consumers.
In the light of decisions in GTL Infrastructure Ltd. and Reliance Infratel ltd, the bench held that post 2006 appellants are providing passive telephone infrastructural and paying service tax categorically of Business Auxiliary services or Business Support services. “Therefore, the appellant are entitled to take Cenvat Credit on towers, portable shelters and accessories thereof as per the definition of Rule 2(k)(2) of Cenvat Credit Rules, 2004 as they are providing output services that is Business Auxiliary Services or Business Support Services and there is no restriction for availing Cenvat Credit on inputs namely tower and parts thereof on which duty has been paid by the supplier,” the bench said.To Read the full text of the Order CLICK HERE