2019 (4) TMI 1080 - AT - Service Tax

CENVAT Credit - Towers, tower materials and shelters which were used by the appellants for providing telecommunication service - HELD THAT - The Tribunal in the case of VODAFONE ESSAR SOUTH LTD., AIRCEL CELLULAR LTD., DISHNET WIRELESS LTD. VERSUS CST CHENNAI , 2018 (1) TMI 1218 - CESTAT CHENNAI held that the appellants are not eligible for such credit. Extended period of limitation - HELD THAT - There is no evidence adduced by the Department to substantiate the claim of suppression with intent to evade payment of service tax. We further note that there were conflicting decisions on the issue regarding admissibility of credit on tower and shelter material. There were also numerous proceedings initiated by the department against most of the telecommunication companies. Hence, there is no question of suppression with intent to avail irregular credit - the demand beyond the normal period of limitation is not sustainable, hence set aside. Demand alongwith interest and penalties are set aside as being time-barred - appeal allowed.

Summary

Issues involved:
- Availment of CENVAT Credit on towers, tower materials, and shelters for providing telecommunication services
- Eligibility of credit on tower and shelter materials
- Grounds of limitation for availing the credit
- Conflicting decisions on admissibility of credit on tower and shelter material
- Suppression with intent to evade payment of service tax
- Sustainability of demand beyond the normal period of limitation
- Imposition of penalties

Analysis:
1. Availment of CENVAT Credit: The appellants had availed CENVAT Credit on towers, tower materials, and shelters used for providing telecommunication services. However, it was found that they had availed ineligible credit, leading to proceedings being initiated against them.

2. Eligibility of Credit: The issue revolved around the eligibility of credit on tower and shelter materials. The appellants argued that the issue had been decided in favor of the Department by previous judgments. The Tribunal noted that various decisions, including those of the Hon'ble High Court of Bombay, had ruled against the appellants regarding the eligibility of such credit.

3. Grounds of Limitation: The appellants contended that they believed the credit was eligible and hence availed it in good faith. They argued that since the issue was interpretational and contentious, the invocation of the extended period or imposition of penalties should not be sustained.

4. Conflicting Decisions and Suppression: There were conflicting decisions on the admissibility of credit on tower and shelter material. The Tribunal observed that the appellants had regularly filed their ST-3 returns, disclosing the credit availed. There was no evidence of suppression with intent to evade payment of service tax, especially considering the conflicting decisions and numerous proceedings initiated by the department against telecommunication companies.

5. Sustainability of Demand: The Tribunal held that the demand beyond the normal period of limitation was not sustainable and set it aside. They confirmed the demand within the normal period along with interest. The penalties imposed were also set aside, considering the interpretational nature of the issue and the consistent view of the Tribunal regarding the invocability of the extended period.

6. Imposition of Penalties: Ultimately, the appeals were partly allowed, confirming the demand within the normal period of limitation along with interest and setting aside the demand beyond the normal period and the penalties imposed. The Tribunal concluded that the extended period could not be invoked, and the penalties were unjustified.

7. Final Decision: The appeal was allowed, and the demand along with interest and penalties were set aside as being time-barred. All three appeals were disposed of accordingly.