2013 (12) TMI 429 - AT - Service Tax

Cenvat Credit - Denial of benefit of credit of service tax paid - Output service - Construction service - Held that - Apart from the fact that construction of premises by the provider of output services stands specifically included in the definition of input service and the towers are essential factors to provide telecommunication service - prima facie the appellant is entitled to credit. Demand of service tax - C & F service - Import of various components of the towers - Denial of credit on ground that such service is not C & F service - Held that - By whatever name the service is called, the fact that the same stands utilized by the appellant for procuring the inputs, in which case the same would be covered by the definition of inputs service. Admittedly the service tax stands paid by on the services, the appellants are entitled to avail credit on the same. On this ground also, the appellants have been able to make out a good case in their favour - Stay granted.

Summary

Issues:
1. Denial of modvat credit on service tax paid for construction services for towers and shelters.
2. Denial of credit on service tax for C & F services for importing tower components.

Analysis:

Issue 1: Denial of Modvat Credit on Construction Services
The judgment addresses the denial of modvat credit on service tax paid for construction services used for towers and shelters by the appellant. The denial was based on the argument that telecommunication services could be provided without the towers. However, the Tribunal noted that the construction of premises by the service provider is included in the definition of input service. Moreover, the towers are deemed essential for providing telecommunication services. The Tribunal also highlighted a previous case where the same issue was decided in favor of the appellant by the Commissioner of Central Excise, Chandigarh. Therefore, the Tribunal concluded that the appellant is entitled to the credit at this prima facie stage.

Issue 2: Denial of Credit on C & F Services
The judgment also deals with the denial of credit on service tax for C & F services utilized by the appellant for importing various components of the towers. The adjudicating authority denied the credit, arguing that the services did not fall under the category of C & F services. However, the Tribunal disagreed, stating that regardless of the name given to the services by the Revenue, they were used by the appellant to procure inputs. Since service tax was paid on these services by the provider, the appellant was entitled to avail credit. The Tribunal emphasized that as long as the services were used for procuring inputs, they would be covered under the definition of input services. Consequently, the Tribunal found in favor of the appellant and allowed the stay petition unconditionally, ordering the appellant to be granted the credit.

In conclusion, the judgment ruled in favor of the appellant on both issues, granting them the modvat credit on construction services for towers and shelters and allowing the credit on C & F services for importing tower components.