2018 (9) TMI 985 - AT - Service Tax

CENVAT credit - inputs - Tower and Shelter Materials - time limitation - penalty - Held that - The said issue stands decided in the decision of the High Court of Bombay in the case of Bharti Airtel Ltd, 2014 (9) TMI 38 - BOMBAY HIGH COURT where it was held that the appellants are not eligible for such credit. However, the demand for the extended period as well as the penalties for the normal period is set aside - in the present case, the appellants had disclosed all the details as required by the Department as and when called for, apart from disclosing the credit availed in their ST-3 returns. It is also seen that they were under the bona fide belief that they are entitled to avail the credit of duty paid on tower and pre-fabricated building materials used for providing output service of telecommunication services - extended period and penalty not justified. CENVAT credit - SIM Cards - allegation of the Department is that since the appellants have sold the SIM Cards, the credit availed on such SIM Cards has to be reversed by them - Held that - In the appellant s own case, the demand for levy of VAT on the sale of SIM Cards was dropped by the Deputy Commissioner of Commercial Taxes by holding that the sale of SIM Cards is not goods sold or intended to be sold to the customer - credit availed by the appellants on SIM Cards is eligible and the demand for reversal cannot sustain. CENVAT Credit - various input services - Held that - The definition of input services during the period prior to 01.04.2011 had a wide ambit as it included the words activities relating to business . Thus, all the services in the said table is held eligible (except subscription paid to club) - as regards, subscription paid to club, it is not established by the appellant as to why or how such services are related to the output services provided by them. The credit availed on subscription paid to club does not qualify as input service and therefore, the disallowance of credit on such service is upheld. CENVAT Credit of ₹ 58,60,300/- - dis-allowance for the reason that the appellants have not produced necessary documents and that the documents do not contain necessary details - Held that - We cannot find any merit in the contention raised by the appellant without producing documents on which credit has been availed, and without furnishing necessary details of such documents so as to establish the credit availed, the appellant cannot contend that the credit is eligible - credit not allowed - However, the demand in respect of this amount which pertains to the extended period will require to be set aside. Appeal allowed in part.

Summary

Issues Involved:
1. Credit on Towers and Shelter Materials
2. Credit availed on sale of SIM cards
3. Credit on input services pertaining to tower/shelter and activities relating to business
4. Credit availed on input services denied due to insufficient information

Detailed Analysis:

1. Credit on Towers and Shelter Materials:
The appellants availed credit on Towers and Shelter Materials, which was contested by the Revenue and upheld by the Larger Bench in Tower Vision India Pvt. Ltd. and the Hon’ble Bombay High Court in Bharti Airtel Ltd. The Tribunal, in the appellant’s own case, had previously set aside the demand for the extended period and penalties for the normal period, citing a bona fide belief and lack of suppression of facts. The Tribunal reiterated that the extended period cannot be invoked, and penalties are unjustified.

2. Credit availed on sale of SIM cards:
The Department argued that since the SIM cards were sold, the credit availed must be reversed. The appellants relied on the Apex Court decision in Idea Mobile Communication Ltd., which held that the value of SIM cards forms part of activation charges and is liable to service tax. The Tribunal found the credit availed on SIM cards to be eligible, setting aside the demand for reversal.

3. Credit on input services pertaining to tower/shelter and activities relating to business:
The appellants provided a detailed list of input services availed for providing telecommunication services, arguing their eligibility based on various precedents. The Tribunal noted that services like erection, construction, installation, and collection charges have a direct nexus with the output service and are eligible for credit. The Tribunal upheld the credit for most input services, except for the subscription paid to the club, which was not established as related to the output services.

4. Credit availed on input services denied due to insufficient information:
The credit of ?58,60,300/- was denied due to lack of necessary documents and details. The Tribunal upheld the disallowance for the normal period, emphasizing the need for proper documentation to establish credit eligibility. However, the demand for the extended period was set aside.

Conclusion:
- The credit on Towers and Shelter Materials is sustained on merits, with the demand for the extended period and penalties set aside.
- The demand for reversal of credit on SIM cards is set aside.
- The demand on input services, except for the subscription paid to the club, is set aside. The demand for the subscription paid to the club within the normal period is upheld with interest and penalties.
- The entire demand for credit availed without sufficient information is upheld for the normal period, with the extended period demand set aside.

The matter is remanded to the adjudicating authority for quantifying the demand for the normal period, and the appeal is partly allowed with consequential benefits.