2019 (11) TMI 1162 - AT - Service Tax

CENVAT credit - input - tower and shelters - input services - services used for erection of towers for providing telecommunication services - HELD THAT - The issue decided in the case of M/S. BHARATI INFRATEL LIMITED VERSUS COMMISSIONER OF SERVICE TAX, DELHI-IV 2019 (5) TMI 1698 - CESTAT CHANDIGARH where it was held that the assessee-appellant are entitled to avail cenvat credit on items, towers, shelter parts thereof being input used for providing output service - credit on inputs allowed. Input services - services used for erection and installation telcom towers - HELD THAT - In the case of Bharat Sanchar Nigam Limited vs. CCE, Chandigarh 2016 (8) TMI 1284 - CESTAT, CHANDIGARH , this Tribunal has allowed the credit for the services used for erection and installation telcom towers wherein this Tribunal has observed that Since the disputed services have been used by the appellant for erection of the telecom towers, which is used for providing the taxable output service, in my opinion, it will not be appropriate to deny the Cenvat benefit - credit of input services used for erection of towers to the appellants allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of Cenvat credit on tower and shelters; Credit on services used for erection of towers for telecommunication services.

Analysis:
1. The appellant appealed against the denial of Cenvat credit on tower, shelters, and support structures used for telecommunication services. The Tribunal considered whether the appellant was entitled to such credit. The Tribunal referred to a previous case involving Bharati Infratel Limited where it was established that towers and shelters, being bolted or fastened and not permanently assimilated with the structure, do not constitute immovable property. The Tribunal further emphasized that the functional utility test determines the eligibility of towers and shelters as inputs for providing cellular connectivity, making them eligible for Cenvat credit. The Tribunal concluded that the appellant was entitled to avail Cenvat credit on towers and shelters.

2. The Tribunal also evaluated the entitlement of the appellant to credit on services used for the erection of towers for telecommunication services. Citing a case involving Bharat Sanchar Nigam Limited, the Tribunal noted that even if the services did not fit the definition of "input service" under the Cenvat Credit Rules, since they were used for erecting towers essential for providing taxable output services, denying Cenvat benefits would not be appropriate. Consequently, the Tribunal allowed the Cenvat credit on both towers and shelters, as well as the services used for tower erection, setting aside the impugned order and granting consequential relief to the appellant.

In summary, the Tribunal ruled in favor of the appellant, allowing Cenvat credit on tower, shelters, support structures, and services used for tower erection for providing telecommunication services based on established legal precedents and interpretations of the Cenvat Credit Rules.