2015 (6) TMI 544 - AT - Service Tax

Cenvat Credit - availment of Cenvat Credit on the capital goods and the input services - construction of towers for providing Telecom Infrastructure - Held that - the issue involved in this case is regarding the services rendered by the appellants as infrastructure service providers and not as telecom service provider and are providing business support service in form of infrastructure service; - Decisions in the cases of GTL Infrastructure Ltd. 2014 (9) TMI 647 - CESTAT MUMBAI and Reliance Infratel Ltd. (2015 (3) TMI 701 - CESTAT MUMBAI) followed - cenvat credit allowed - impugned orders are unsustainable and liable to be set aside - Decided in favor of assessee.

Summary

Issues:
Availment of Cenvat Credit on capital goods and input services for constructing/erecting towers used for providing Business Support Services.

Analysis:
The case involved two appeals against Order-in-Originals related to the appellants being providers of Telecom Infrastructure, owning and leasing out towers to telecom companies, discharging service tax under Business Support Services. The dispute centered on the admissibility of Cenvat Credit availed by the appellants. The lower authorities contended that the credit was inadmissible. Show cause notices were issued, leading to confirmation of demand, interest, and penalties by the adjudicating authority.

The appellants argued that the towers were essential for providing output services, citing precedents like GTL Infrastructure Ltd. judgment. The Revenue contended that towers, being immovable property, couldn't be considered inputs for output services. Reference was made to the Bharti Airtel Ltd. case where Cenvat Credit on towers was denied. The AR highlighted the importance of a nexus for Cenvat Credit availment and the definition of input services post-2011.

The Tribunal found that the issue revolved around Cenvat Credit on capital goods and input services by the appellants, who were registered for Business Support Services. It was acknowledged that the towers were used for providing output services to telecom companies. Precedents like GTL Infrastructure Ltd. supported the appellants' eligibility for Cenvat Credit. The Tribunal rejected the Revenue's arguments based on the Bharti Airtel Ltd. judgment, emphasizing the applicability of the precedents favoring the appellants.

The Tribunal concluded that the impugned orders were unsustainable based on authoritative judicial pronouncements favoring the appellants. The appeals were allowed with consequential relief, as the issue was resolved on merits without delving into other raised issues.

This detailed analysis highlights the dispute over Cenvat Credit availment on capital goods and input services for tower construction, emphasizing precedents, legal interpretations, and the final decision by the Tribunal to allow the appeals based on established legal principles.