2018 (9) TMI 1646 - AAR - GST

Input Tax Credit (ITC) - goods and services used for erection of infrastructure to which fibre cables are connected - fibre cables leased to Telecommunication Operators - whether Cenvat credit of goods and services used for erection of infrastructure to which fibre cables are connected for leasing to Telecommunication Operators, is available to them? Held that - The telecommunication towers are used for hoisting e antennae to predetermined and technically viable heights for optimum coverage of the cellular network. The towers are typically erected at the site and also comprise poles for mounting the antennae, sheIters and housing for electrical and telecom equipment. Telecommunication Towers are in the nature of immovable property and are consists of A pre-fabricated shelter made of insulating PUF material made of fibres, Electronic Panel, Base Transceiver Station (BTS) and other radio transmission and reception equipment, A diesel generator set and Six poles of 6 to 9 meters length each made of hollow steel galvanized pipes - Each of these goods had independent functions and hence, they cannot be treated and classified as single unit. It also observed that all goods are not eligible for credit and only those relatable to output services would be eligible for credit. Since the towers merely enabled the antennae to function, they did not enter the composition of the antenna themselves and could not be construed as components or parts thereof. Further, only telecom equipments like BTS transmitters which are used in providing telecom services alone would be liable to input credit. The towers and PFB are in the nature of immovable goods hence, ITC not admissible on the same. If the goods are movable from one place to another in the same position or liable to be dismantled and re-erected at the later place, if it is liable to be shifted and was dismantled or re-erected at a later place, it will be movable property. But if erected permanently with out being shifted from place to place, then it would be treated as permanently attached to the earth and the same will be treated as immovable property - thus, telecommunication tower does not come within the purview of goods in as much as the same being a immovable property and the ITC on telecommunication tower is not admissible as per explanation to Section 17(6) of the CGST/SGST Act, 2017. The infrastructure provided by the applicant is different from Telecommunication Tower in as much as the in infrastructure provided by the applicant does not contain in a. pre-fabricated shelter made of insulating PUF material made of fibres; b. electronic Panel; c. Base Transceiver Station (BTS) and other radio transmission and reception equipment ; d. diesel generator set; the infrastructure is not a immovable property as it can be easily be moved to another place for use without any damage to the entire infrastructure. Therefore the infrastructure provided by the applicant is to be construed as movable property ; height of pole is 7m to 9m whereas height of telecommunication tower is 70m to 90m and the infrastructure being a movable property can be classified as goods in terms of section 2(52) of CGST/SGST Act, 2017. Ruling - The infrastructure provided by the applicant is different from Telecommunication Tower and accordingly applicant can avail ITC on GST paid on the goods & services in terms of section 16(1) of CGST/SGST Act, 2017, consumed while providing the supply in question.

Summary

Issues Involved:
1. Admissibility of Input Tax Credit (ITC) on goods and services used for the erection of infrastructure for telecommunication operators.
2. Classification of the infrastructure provided by the applicant as movable or immovable property.
3. Eligibility of the applicant to avail ITC on GST paid on goods and services used in the infrastructure.

Issue-wise Detailed Analysis:

1. Admissibility of ITC on Goods and Services Used for Erection of Infrastructure for Telecommunication Operators:
The applicant sought an advance ruling on whether the Cenvat credit of goods and services used for the erection of infrastructure to which fibre cables are connected for leasing to telecommunication operators is available. The Authority for Advance Rulings (AAR) admitted the application under Section 97(2)(d) of the CGST/SGST Act, 2017, which pertains to the admissibility of input tax credit of tax paid or deemed to have been paid.

2. Classification of the Infrastructure Provided by the Applicant as Movable or Immovable Property:
The infrastructure in question includes items like steel tabular poles, galvanized iron wire, nuts and bolts, optical fibre cables, plastic pipes, and clamps. The AAR examined whether this infrastructure qualifies as a "Telecommunication Tower" and whether it is classified as movable or immovable property. The infrastructure provided by the applicant does not contain elements typically found in telecommunication towers, such as pre-fabricated shelters, electronic panels, Base Transceiver Stations (BTS), and other radio transmission and reception equipment. The infrastructure is not permanently affixed to the earth and can be moved without damage, thus classifying it as movable property.

3. Eligibility of the Applicant to Avail ITC on GST Paid on Goods and Services Used in the Infrastructure:
The relevant provisions of the CGST/SGST Act, 2017, including Sections 16 and 17, were examined. Section 17(5) restricts ITC on goods or services used for the construction of immovable property. However, since the infrastructure provided by the applicant is classified as movable property, it does not fall under these restrictions. The AAR concluded that the infrastructure provided by the applicant is different from a "Telecommunication Tower" and is considered movable property. Therefore, the applicant is eligible to avail ITC on GST paid on the goods and services used in the erection of this infrastructure, as per Section 16(1) of the CGST/SGST Act, 2017.

Conclusion:
The infrastructure provided by the applicant is classified as movable property and does not fall under the definition of a "Telecommunication Tower." Consequently, the applicant is eligible to avail ITC on GST paid on the goods and services used in the erection of this infrastructure.