2018 (1) TMI 1218 - AT - Service Tax

CENVAT credit - inputs / capital goods - structural items like MS angles etc. and also various capital goods which are all used for setting up of telecommunication towers in various places - Held that - the matter is no more res integra as the Hon ble Bombay High Court in Bharti Airtel Ltd. 2014 (9) TMI 38 - BOMBAY HIGH COURT as well as Larger Bench decision in Tower Vision India Pvt. Ltd. 2016 (3) TMI 165 - CESTAT NEW DELHI (LB) held that credit on such inputs / capital goods as claimed by the appellant are not available - credit not allowed. CENVAT credit - various input services - Erection and Construction service - Rent-a-cab service - Outdoor Catering service - Air Travel Agency service - Tour Operator service - Business Auxiliary Service - Authorized Service Station service - Subscription fees etc. - Held that - the service of erecting of such tower is essentially an input service covered by the main means clause of the definition for input service that is used by a service provider for providing output service - reliance placed in the case of Bharat Sanchar Nigam Ltd. Versus Commissioner of C. Ex., Chandigarh-I 2016 (8) TMI 1284 - CESTAT, CHANDIGARH - credit allowed. Rent-a-cab services - Outdoor catering services - Air Travel Agent services - tour operator service - denial of credit is not due to non-availability of documents - Held that - we are not fully satisfied with the details on the basis and the purposes of such credit and accordingly we are in agreement with the lower authorities in denying them in the absence of any contrary evidence produced by the appellant to establish their eligibility for the same. Extended period of limitation - penalty - Held that - Admittedly, the dispute is one involving legal interpretation and difference of opinion. In such circumstances, it is not tenable to invoke ingredients of Section 73 proviso for confirming the demand for extended period as well as imposing penalties. Appeal allowed in part.

Summary

Issues involved:
1. Dispute over cenvat credit on inputs and capital goods used for setting up telecommunication towers.
2. Dispute regarding cenvat credit on various input services availed by telecommunication business operators.

Analysis:

Issue 1: Dispute over cenvat credit on inputs and capital goods used for setting up telecommunication towers:

The appeals involved a dispute related to the cenvat credit availed by telecommunication business operators on structural items and capital goods used for setting up telecommunication towers. The lower authority denied the credit, stating that these items did not meet the statutory definition of inputs or capital goods. The appellants argued that the telecommunication towers were essential infrastructure for providing services and thus should be eligible for credit. The matter had been previously addressed in a Larger Bench decision and was under appeal at the Delhi High Court. The Tribunal held that based on previous decisions, the appellants were not eligible for the credits on inputs and capital goods.

Issue 2: Dispute regarding cenvat credit on various input services availed by telecommunication business operators:

The second dispute revolved around the cenvat credit availed on various input services such as erection and construction service, rent-a-cab service, outdoor catering service, air travel agency service, tour operator service, etc. The appellants claimed that these services were directly used in connection with providing telecommunication services and should be eligible for credit. The Tribunal analyzed the eligibility of these input services and held that the credits related to the erection of telecommunication towers were indeed eligible for the appellants. However, for other input services, the Tribunal found that the appellants had not provided sufficient evidence to establish their eligibility, leading to the denial of those credits.

In conclusion, the Tribunal upheld the denial of credit on inputs and capital goods used in creating telecommunication towers but allowed the credits on input services related to tower erection. The demand for extended periods and penalties were restricted to the normal period without imposing penalties, considering the legal interpretation disputes involved in the case.

The appeals were disposed of accordingly, with the Tribunal providing a detailed analysis and rationale for its decision on each issue presented before them.