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2017 (10) TMI 445 - AT - Service TaxCENVAT credit - inputs/capital goods - towers, shelters & prefabricated building etc. - Revenue is of the view that the appellants have taken cenvat credit wrongly, as the said items are not covered within the definition of capital goods or inputs - Whether the appellant is entitled to avail cenvat credit of duty paid on towers material, shelters & pre-fabricated buildings etc. or not? - Held that - As the Larger Bench of this Tribunal in the case of BSNL and others 2016 (3) TMI 165 - CESTAT NEW DELHI (LB) 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 appellant is not entitled to avail the cenvat credit on the items in question. Whether in the facts and circumstances of the case, the extended period of limitation is invocable or not? - Whether the penalty is imposable on the appellant or not? - Held that - on merits, if the issue of availment of cenvat credit was in dispute upto the level of this Tribunal, in that circumstances, the allegation of suppression or concealment on fact/mis-statement is not sustainable - the extended period of limitation is not invocable, therefore, the demands pertaining to the extended period of limitation are set aside - penalties also set aside. Appeal allowed in part.
Issues Involved:
1. Entitlement of Cenvat credit on towers, shelters, and prefabricated buildings. 2. Invocability of the extended period of limitation. 3. Imposability of penalties on the appellant. Issue No. 1: Entitlement to Cenvat Credit on Towers, Shelters, and Prefabricated Buildings The Tribunal held that, based on the Larger Bench decision in the case of BSNL and others, cenvat credit is not available on towers, shelters, and prefabricated buildings as they become immovable property once affixed to the earth. This was further supported by the Tribunal's decisions in Vodafone Essar Mobile Services Ltd. and Vodafone Essar South Ltd., which also denied cenvat credit on similar grounds. Consequently, the Tribunal concluded that the appellant is not entitled to avail cenvat credit on these items. Issue No. 2 & 3: Extended Period of Limitation and Penalty The Tribunal found that the issue of cenvat credit availability on the disputed items was contentious and subject to interpretation. This matter was referred to the Larger Bench, and the Tribunal noted conflicting decisions from various High Courts, such as the Bombay High Court in Bharti Airtel Ltd. and the Gujarat High Court in Mundra Ports & Special Economic Zones Ltd. Given this judicial divergence and the fact that the issue was first decided against the appellant only in 2012, the Tribunal held that the allegation of suppression of facts was not sustainable. Therefore, the extended period of limitation was deemed not invocable, and the demands pertaining to this period were set aside. Similarly, penalties imposed on the appellant were also set aside, as the Tribunal observed that the appellant's actions were not driven by malafide intent but were rather influenced by the prevailing judicial ambiguity. Separate Opinion by Devender Singh: Devender Singh concurred with the overall result but provided additional legal reasoning. He emphasized that the issue of cenvat credit on telecom towers, PFB, and parts thereof was debatable and not free from doubt during the relevant period. Both the referral bench members had held that the extended period of limitation was not invocable. Citing the Hon’ble Apex Court's decision in Continental Foundation Joint Venture Vs. CCE, Chandigarh, Singh argued that when there is scope for doubt, the longer period of limitation cannot be invoked. Consequently, penalties were also deemed not imposable. Final Order: 1. On merits, the appellants have no case in light of the Bharti Airtel Ltd. decision of the Bombay High Court. 2. Post-2006, if the appellant is paying service tax under Business Auxiliary Services or Business Support Services for providing passive infrastructure, they are entitled to cenvat credit on towers, prefabricated shelters, and parts thereof. 3. In appeal no. ST/777/2009, the appellant is entitled to cenvat credit of ?2,59,95,327/- on shelters/parts classified under Chapter 85. 4. The extended period of limitation is not invocable, and demands beyond the normal period are set aside. 5. Penalties imposed on the appellants are set aside. Conclusion: The appeals were disposed of with the above terms, and the Misc applications were also disposed of accordingly.
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