2024 (11) TMI 1221 - AT - Service Tax

Disallowance of CENVAT Credit availed on DG set and tower dismantling services - inward supplies of Services of transportation, procurement and filling of diesel and DG set and tower dismantling services. CENVAT Credit on the services of transportation, procurement and filling of diesel by the appellant - HELD THAT - We observe that that the DG sets are necessary for running of the cell sites and providing the telecommunication service by the appellant. For continuous running of the DG sets, diesel should always be available. Thus, as a part of providing operations maintenance services, the service providers procured, transported and filled diesel in the DG sets to ensure their continuous operation and sustenance of the cell sites. On such activity of procurement, transportation and filling, the service providers charged service tax to the Appellant under the head Business Support Services. We observe that the means clause of the definition of input service includes those services which are used by the service provider for providing output services. Given the wide ambit of the said definition, we hold that the CENVAT credit availed by the appellant on the business support services qualifies as 'input services'. Accordingly, we hold that the Appellant is eligible for the credit as 'input service'. The issue is no more res integra as this Tribunal has already decided the same issue of the appellant for the prior period April 2011 to December 2011 and allowed the Cenvat Credit on such services as reported in M/s. Bharti Hexacom Limited 2024 (10) TMI 1064 - CESTAT KOLKATA We find that the appellant is eligible for the CENVAT credit availed on the business support services, which qualifies as 'input services' and accordingly, we set aside the disallowance of the credit in the impugned order. CENVAT Credit on DG sets and tower dismantling services - We observe that the DG sets needs to be dismantled when they stop working due to wear and tear or due to various administrative reasons. When they are dismantled and a new DG set needs to be installed in its place, the appellant availed the services of some service providers for the dismantling work. We observe that such services which are used to dismantle the DG sets or Towers, are used by the Appellant only in the course or furtherance of the telecommunication business. Accordingly, we hold that the Appellant are eligible for the credit of service tax paid on such services, as 'input service' and accordingly, we set aside the disallowance of the credit in the impugned order. We also observe that that the Appellant has not suppressed any information from the Department. In the absence of any suppression of facts or mala fide intent on the part of the Appellant, extended period of limitation is not invokable. We agree with the submission of the Appellant that extended period cannot be invoked when the issue involves interpretation of statute. Thus, we hold that the demands confirmed in the impugned order by invoking the extended period of limitation are not sustainable.

Issues Involved:

1. Eligibility of CENVAT Credit on services related to transportation, procurement, and filling of diesel.
2. Eligibility of CENVAT Credit on DG set and tower dismantling services.
3. Invocation of extended period of limitation due to alleged suppression of facts.

Detailed Analysis:

Issue 1: Eligibility of CENVAT Credit on Services Related to Transportation, Procurement, and Filling of Diesel

The primary contention revolves around whether the Appellant can avail CENVAT Credit on services related to the transportation, procurement, and filling of diesel, which are essential for the operation of DG sets at cell sites. The Appellant argued that these services are integral to providing uninterrupted telecommunication services, as DG sets require diesel to function continuously. The service providers charged service tax under Business Support Services for these operations. The Tribunal observed that the definition of 'input service' includes services used by the service provider for providing output services. Given this broad definition, the Tribunal held that the CENVAT Credit availed on these business support services qualifies as 'input services.' The Tribunal also noted that this issue had been previously decided in favor of the Appellant for a prior period, further supporting their eligibility for the credit. Consequently, the Tribunal set aside the disallowance of the credit in the impugned order.

Issue 2: Eligibility of CENVAT Credit on DG Set and Tower Dismantling Services

The second issue pertains to the eligibility of CENVAT Credit on services related to the dismantling of DG sets and towers. The Appellant contended that dismantling services are necessary when DG sets cease functioning or need to be relocated due to lease expirations or repairs. These services are used in the course or furtherance of the telecommunication business. The Tribunal agreed with the Appellant, observing that such services are indeed used for the telecommunication business, and thus qualify as 'input services.' Therefore, the Tribunal held that the Appellant is eligible for the credit of service tax paid on these dismantling services and set aside the disallowance in the impugned order.

Issue 3: Invocation of Extended Period of Limitation

The final issue concerns the invocation of the extended period of limitation based on alleged suppression of facts by the Appellant. The Appellant argued that they had not suppressed any information and had availed the CENVAT Credit based on a bona fide interpretation of the statute, supported by settled precedents. The Tribunal concurred, finding no evidence of suppression or mala fide intent by the Appellant. It was noted that the issue involved an interpretation of the statute, which does not justify invoking the extended period. As a result, the Tribunal held that the demands confirmed by invoking the extended period are unsustainable. Furthermore, since the Appellant was deemed eligible for the credit, the Tribunal ruled that the demands for interest and penalties were unwarranted and set them aside.

Conclusion:

The Tribunal concluded by setting aside the impugned order, allowing the appeal filed by the Appellant. The operative part of the order was pronounced in open court, affirming the Appellant's eligibility for the CENVAT Credit on both counts and dismissing the extended period of limitation claims.

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