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2025 (1) TMI 1373 - AT - Service TaxCENVAT Credit - whether the inputs like angles channels beams etc used to erect tower and prefabricated buildings/shelters which are used for housing / storage of generator set / equipments and hoisting the antenna etc. in respect of which the credit has been denied by the Department would be eligible for taking credit when used for setting up of mobile towers and pre-fabricated structures etc. by treating them as immovable goods? - HELD THAT - This matter has been dealt with in detail by the Hon ble Supreme Court in the Bharti Airtel 2024 (11) TMI 1042 - SUPREME COURT where they have gone through various judgements including that of Mumbai High Court in the case of Bharti Airtel as well as Delhi High Court in Vodafone 2018 (11) TMI 713 - DELHI HIGH COURT and finally observed and held that mobile towers are not in the nature of immovable goods. Hon ble Supreme Court also examined and decided on the issue as to whether the credit would be admissible as an input or capital goods. Relevant observation by Hon ble Supreme Court it was interalia held that since tower is to be considered as capital goods and therefore all components spares and accessories would also fall within the category of capital goods. Conclusion - The denial of credit in respect of Angles Channels Beams etc. used to erect towers as also on PFB etc. falling under Chapter 94 used for housing /storage of generating sets and other equipments/components is not sustainable. Appeal allowed.
ISSUES PRESENTED and CONSIDERED
The primary issue considered in this case was whether the inputs such as angles, channels, and beams used in the erection of mobile towers and prefabricated buildings/shelters, which are utilized for housing and storage of generator sets and equipment, qualify for CENVAT credit. The core question was whether these items should be treated as immovable goods, thereby disqualifying them from credit eligibility, or as movable goods, allowing for such credit under the CENVAT Rules. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The legal framework centered around the interpretation of "goods" under the CENVAT Rules, specifically the definitions provided in Rule 2(a)(A) for "capital goods" and Rule 2(k) for "inputs." The precedents include the Supreme Court's decision in the Bharti Airtel case, which dealt with similar issues regarding the classification of mobile towers as movable or immovable goods. Court's Interpretation and Reasoning The Tribunal relied heavily on the Supreme Court's findings in the Bharti Airtel case, where it was determined that mobile towers are not immovable goods. The Supreme Court applied tests of permanency, intendment, functionality, and marketability to conclude that mobile towers and prefabricated buildings are movable. The Tribunal adopted this reasoning, noting that the towers could be dismantled and relocated without damage, indicating their movability. Key Evidence and Findings The Tribunal considered the nature of the mobile towers' attachment to the land, noting that the annexation was not for permanent enjoyment of the land or building. The capability of the towers to be dismantled and sold in the market further supported their classification as movable goods. Application of Law to Facts Applying the legal principles outlined by the Supreme Court, the Tribunal concluded that the mobile towers and prefabricated buildings qualify as "goods" under the CENVAT Rules. Consequently, the inputs used for their erection, such as angles, channels, and beams, are eligible for CENVAT credit. Treatment of Competing Arguments The Department's argument that the mobile towers should be treated as immovable goods was countered by the Tribunal's reliance on the Supreme Court's precedent, which clearly classified these structures as movable. The Tribunal found no merit in the Department's position and dismissed it in favor of the appellant's argument. Conclusions The Tribunal concluded that the denial of CENVAT credit by the Department was unsustainable. The inputs used in the erection of mobile towers and prefabricated buildings are eligible for credit as they qualify as "goods" under the CENVAT Rules. SIGNIFICANT HOLDINGS The Tribunal's decision was significantly influenced by the Supreme Court's reasoning in the Bharti Airtel case. The core principle established is that mobile towers and prefabricated buildings, being movable, qualify as "goods" and thus are eligible for CENVAT credit. The Tribunal's final determination was to allow the appeal, thereby granting the appellant the right to avail of the CENVAT credit on the disputed inputs. The Tribunal's decision underscores the importance of adhering to established legal precedents and highlights the criteria for determining the movability of structures like mobile towers within the context of tax credits under the CENVAT Rules.
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