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2021 (4) TMI 306 - AT - Service TaxCENVAT Credit - inputs/capital goods - Angles, Channels, Beams, MS Tower parts (SS Mats) etc. used in erection and installation of towers - Pre-fabricated buildings/shelters/PUF panels used for housing/storage of generating sets and other components/equipments/spares etc. - denial on account of nexus with output services - extended period of limitation - HELD THAT - Hon ble Bombay High Court in Bharti Airtel Limited v. CCE, Pune-III 2014 (9) TMI 38 - BOMBAY HIGH COURT has upheld the stand of the Department disallowing credit, while Hon ble High Court that of Delhi held that credit is admissible in the case of Vodafone Mobile Services Others 2018 (11) TMI 713 - DELHI HIGH COURT . The jurisdictional High Court has not pronounced any judgment on this issue. Thus, it is clear that two High Courts have taken a completely contrary opinion in the matter having identical facts as the instant case. Both the decisions are appealed against and admitted and are for consideration before the Hon ble Apex Court. We find that there is no judgement passed by the jurisdictional High Court on this issue. However, we find that Larger Bench of the Tribunal in the case of Tower Vision India Pvt Ltd Vs CCE 2016 (3) TMI 165 - CESTAT NEW DELHI (LB) has deliberated the issue at length and decided that credit is not admissible. We are of the considered opinion that we are bound by the judgement of the larger Bench. Extended period of Limitation - HELD THAT - In the instant case, demand pertains to period 10.9.2004 to 30.09.2006. Show cause Notice has been issued on 06.07.2009, which is clearly beyond the period of limitation - There was difference of opinion between members of CESTAT. The issue was referred to Larger Bench. It clearly indicates that the issue involved is of interpretation of a question of Law and therefore, mala fides cannot be attributed. The appellants submitted that they have been regularly filing returns - Hon ble High Court of Karnataka MTR Foods Ltd 2012 (10) TMI 165 - KARNATAKA HIGH COURT held that under such circumstances, extended period cannot be invoked. While upholding the Revenue stand on merits, the appeals are allowed on limitation.
Issues Involved:
1. Eligibility of CENVAT credit on towers, tower materials, and pre-fabricated shelters as capital goods. 2. Eligibility of CENVAT credit on towers, tower materials, and pre-fabricated shelters as inputs. 3. Classification of towers as movable or immovable property. 4. Applicability of extended period of limitation for the demand. Detailed Analysis: 1. Eligibility of CENVAT credit on towers, tower materials, and pre-fabricated shelters as capital goods: The appellants argued that the towers and pre-fabricated shelters are integral to the cell sites for providing cellular coverage, thus qualifying as capital goods. They cited that these structures support the antennae, which are essential for telecommunication services, and hence, should be considered as "Components, Spares, and Accessories" of capital goods. However, the Department contended that these items are not directly used for providing the output service and are attached to the earth, making them immovable and not capital goods. The Bombay High Court in Bharti Airtel Ltd. (2014) and Vodafone India Ltd. (2015) supported this view, stating that towers and parts fall under Chapter Heading 7308, which is not specified in Rule 2(a)(A) of the Credit Rules, thus not qualifying as capital goods. 2. Eligibility of CENVAT credit on towers, tower materials, and pre-fabricated shelters as inputs: The appellants claimed that the term "all goods" in Rule 2(k)(ii) of the Cenvat Credit Rules, 2004, includes goods used for providing any output service, thus covering towers and shelters as inputs. They argued that these structures are essential for the installation of transmission devices and other equipment. The Delhi High Court in Vodafone Mobile Services & Others (2019) supported this view, stating that towers and shelters enhance the efficiency of BTS and act as components/parts or accessories, thus qualifying as inputs. However, the Bombay High Court disagreed, emphasizing that towers are immovable and cannot be considered goods, thus not qualifying as inputs. 3. Classification of towers as movable or immovable property: The appellants argued that towers are movable as they are received in Completely Knocked Down (CKD) condition and can be dismantled and re-erected at different locations. They cited the Delhi High Court's decision in Vodafone Mobile Services Ltd. and others (2019), which held that the entitlement of CENVAT credit is determined at the time of receipt of goods, and subsequent fixation to the earth does not change their classification as movable goods. The Department, however, maintained that towers, once erected, become immovable property, thus disqualifying them from being considered as capital goods or inputs. 4. Applicability of extended period of limitation for the demand: The appellants argued that the extended period of limitation is not applicable as the issue of credit availability on towers and shelters has been a subject of dispute and interpretational nature. They cited various judgments, including their own cases, where extended period was not invoked due to the interpretational nature of the issue. The Department, however, argued that the appellants did not declare the details of items on which credit was availed, thus justifying the invocation of the extended period. The Tribunal found that the demand pertains to a period beyond the normal limitation and that there was no evidence of any positive act by the appellants to evade duty. Citing the Supreme Court's decision in Pushpam Pharmaceuticals (1995) and Continental Foundation Joint Venture (2007), the Tribunal held that the extended period cannot be invoked as the issue is debatable and involves interpretation of law. Conclusion: The Tribunal upheld the Department's stand on merits, denying the CENVAT credit on towers, tower materials, and pre-fabricated shelters as capital goods or inputs. However, it allowed the appeals on the ground of limitation, finding the demands barred by the extended period of limitation.
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