9911796707
TMI Blog2021 (10) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... MISSIONER OF SERVICE TAX, DELHI [ 2018 (11) TMI 713 - DELHI HIGH COURT] ., VODAFONE MOBILE SERVICES LIMITED, INDUS TOWERS LIMITED, TOWER VISION INDIA PRIVATE LIMITED, BHARTI INFRATEL LIMITED, VERSUS COMMISSIONER OF SERVICE TAX, DELHI [ 2018 (11) TMI 713 - DELHI HIGH COURT] , Delhi High Court have taken a contrary view after examining and distinguishing the judgment of Bombay High Court - the credit, of inputs / capital goods and services utilized in fabrication, erection, installation of towers and shelters by the appellants, is admissible to them. Credit of various services availed by the providers of telecom service - HELD THAT:- The credit taken and availed by the appellants on all the impugned services except the service relating to dismantling of towers (in respect of show cause notice dated 13.10.2011) is admissible to them - the appellants have not submitted any suitable reason to consider that the said service is required and the same is in the furtherance of their business - credit availed on service relating to dismantling of towers is not admissible to them. Validity of SCN - HELD THAT:- It is not understood as to how the learned Commissioner has come to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces are as under. SCN No. Date Period Amount (Rs.) 26/2010 08.10.2010 2009-10 21,91,58,701 27/2010 14.10.2010 2008-10 75,27,87,242 10/2011 13.10.2011 2010-11 57,24,099 2. Learned Counsel for the appellant submits his submissions Show Cause Notice wise. Regarding the first Show Cause Notice dated 08.10.2010, he submits that the credit involved on capital goods and inputs was only 2,19,754 and the credit involved on Erection, Commissioning or Installation Service and Construction Service, availed from companies like M/s Aster Tele Services, was ₹ 21,89,38,947; Learned Commissioner has wrongly held that the erection of towers and shelters and the services utilized in the erection, commissioning or installation of towers and shelters is not in or in relation to the services rendered by the appellants; the appellants did not substantiate as to how these services were related to the output services. The appellants submit t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices mentioned in the Show Cause Notice comes to only ₹ 3,66,70,444; in respect of other services mentioned in the Show Cause Notice, the appellants did not avail credit on the same; there is an overlap of demand for the period 2009-10,on the credit availed of duty paid on materials/services used in erection, painting, installation of towers and shelters; subsequent Show Cause Notice has been issued invoking extended Period. Learned Counsel submits that the impugned order finds that the credit on disputed services adds up only to ₹ 36,45,08,112; the SCN dated 14.10.2010 did not carry any proposal for ₹ 38,44,55,550; however, proceeds to confirm the total amount giving relief only to the extent of demand already raised in the Notice dated 8-10-2010.He submits that such Show Cause Notice and impugned order being vague, un-substantiating should be set aside. 3.1. In the alternative, Learned Counsel submits that Cenvat credit is admissible on all the services mentioned therein as per the reasons or the case law cited against the services as below: Input services held to be inadmissible Submissions Ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvices were not related to the Appellant s business, the demand must be set aside in toto. He further submits that extended period has been invoked and confirmed on the allegation of suppression of facts; Appellant denies the allegation in entirety as the credit was availed in compliance with law and under a bona fide belief that they are eligible to credit; these facts were always in the knowledge of the Department, and the Appellant has been diligently complying with all statutory prescriptions; in any case, the dispute involves interpretation of complex statutory provisions, having travelled up to the Larger Bench of the Hon ble CESTAT; the very same issue was subjected to wide litigation where two co-ordinate Benches of the Hon ble High Courts have courted differing views; in view of the same, Hon ble Tribunal had set aside the invocation of extended period in disputes of credit availed on towers and shelters in Final Order No. 40194-40207 of 2018 dated 22.01.2018; further, the decision of the Hon ble Supreme Court in Nizam Sugar Factory Vs CCE 2008 (9) STR 314 (SC) is applicable; Show Cause Notices dated 14.10.2010 13.10.2011issued subsequent to the Show Cause Notice dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is based on a rudimentary screwdriver technology. They can be bolted and unbolted, assembled and re-assembled, located and re-located without any damage and the fastening to the earth is only to provide stability and make them wobble and vibration free; devoid of intent to annex it to the earth permanently for the beneficial enjoyment of the land of the owner. The assessees have also placed on record the copies of the leave and license agreements, making it clear that the licensee has the right to add or remove the aforesaid appliances, apparatus, equipment etc. 37 . On an application of the above tests to the cases at hand, this Court sees no difficulty in holding that the manufacture of the plants in question do not constitute annexation and hence cannot be termed as immovable property for the following reasons : (i) The plants in question are not per se immovable property. (ii) Such plants cannot be said to be attached to the earth within the meaning of that expression as defined in Section 3 of the Transfer of Property Act. (iii)The fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free. (iv) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle registered in the name of provider of output service for providing taxable service as specified in sub-clauses (f), (n), (o), (zr), (zzp), (zzt) and (zzw) of clause (105) of section 65 of the Finance Act; (k) input means (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and includes lubricating oils, greases, cutting oils, coolants, accessories of the final products cleared along with the final product, goods used as paint, or as packing material, or as fuel, or for generation of electricity or steam used in or in relation to manufacture of final products or for any other purpose, within the factory of production; (ii) all goods, except light diesel oil, high speed diesel oil, motor spirit, commonly known as petrol and motor vehicles, used for providing any output service. Explanation 1 . - The light diesel oil, high speed diesel oil or motor spirit, commonly known as petrol, shall not be treated as an input for any purpose whatsoever. Explanation 2 . - Input inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut service. Without them, the antennae cannot be installed high above the ground and cannot receive or transmit signals. Therefore, the towers too have to be considered as essential component/part of the capital goods, namely BST and antennae. Further, BTS is an integrated system and each component in the BTS, have to work in tandem to provide cellular connectivity to phone users and to provide efficient services. In the facts of the present case, it is evident that the towers form part of the active infrastructure as the antennae cannot be placed at that altitude to generate uninterrupted frequency. Further, these shelters are accessories for the placement of various BTS equipment and other items for it to remain in a dust-free, ambient temperature. 47 . From the foregoing discussion, clearly towers and shelters support the BTS in effective transmission of the mobile signals and therefore, enhance their efficiency. The towers and shelters plainly act as components/parts and in alternative as accessory to the BTS and would are covered by the definition of capital goods . 48 . In the present cases, the Tribunal, in this Court s view erred in interpreting the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notification to a great extent infructuous and nugatory. Indeed, the notification itself clarifies the word (Inputs) to mean : ...any goods falling under Item No. 68. The sum and substance is to enable manufacturers to claim credit for all Tariff Item 68 goods that go into the manufactured product and on which product full duty is being paid. 50 . It was submitted that the definition of input is but an abbreviation and whatever is used for providing output service, would be an input. The assessee submitted that it is impossible to provide the telephone services, without the tower. Further, pre-fabricated shelters and panels are used for the installation of transmission devices, DG sets and other electronic instruments. It was further, argued that a reading of the rule, made out a clear distinction between the inputs used in the manufacture of excisable goods and the inputs used for providing output service. While, in the case of manufacturing activity, for the goods to qualify as input within the meaning of Rule 2(k) of the Credit Rules, they had to be used in or relation to to the manufacturing activity. In the case of service, the goods only need to be used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... helters are inputs, in accordance with the provisions of Rule 2(k) of the Credit Rules. The CESTAT has erred in holding that there is no nexus between the inputs and the output service. The CESTAT also failed to consider the decision of the AP High Court in case of M/s. Indus Towers Ltd. v. CTO, Hyderabad -(2012) 52 VSR 447, which clearly ruled that the towers and shelters are indeed used and are integrally connected to the rendition of the telecommunication services. Re Question No. 3 : Whether the CESTAT erred in applying the nexus test with reference to MS angles and Channels, whereas according to the appellant what was bought to the site were towers, shelters and accessories in CKD/SKD conditions for providing services? ... ... .... 73 . The conclusion of CESTAT, denying the assessee Cenvat credit on the premise that the towers erected result in immovable property, is erroneous and plainly contrary to Solid and Correct Engineering (supra). The towers that are received in CKD condition, are erected at site, subsequently, giving rise to a structure that remains, safe and stable (commercial reasons of use). The fact that in the intermediate stage, an immovable structu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and therefore, is eligible for credit. The Tribunal in the appellant s own case vide Final Order dated 22.01.2018 has allowed the credit. For this reason, we hold that the credit on this service is eligible. The appellant has availed credit on collection charges which are nothing but charges paid to Bill Collection Agencies. In the case of Bajaj Finance Ltd. Vs. C.C.E., Pune-I 2018 (10) G.S.T.L. 251 (Tri. Mum.) it was held that assessee is entitled to CENVAT Credit on input services which were used for repossession of vehicle by recovery agent. Here, the appellants have used the facility of Bill Collectors/Agents for recovery of the bills from customers. Thus, the said credit availed on such collection charges, in our view, is eligible. The various other services as shown in the table, except that shown in Sl. No. 22, have been held to be eligible for credit in various decisions as cited in the table. 7.2 It is also to be noted that the definition of input services during the period prior to 01.04.2011 had a wide ambit as it included the words activities relating to business . Thus, all the services in the said table from Sl. No. 1 to 25 (except Sl. No. 22) are held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants have correctly relied on the following cases wherein, it was categorically held that extended period cannot be invoked in the subsequent show cause notices; (i) Hyderabad Polymers (P) Ltd. Vs CCE 2004 (166) ELT 151 (SC) (ii) ECE Industries Ltd. Vs CCE 2004 (164) ELT 236 SC) (iii) Nizam Sugar Factory Vs CCE 2006 (197) ELT 465 (SC) (iv) MAA Communications Bozell Ltd. Vs CST 2006 (3) STR 748 (Tri.-Bang.) 13. In view of the above, it is not possible for this Bench to hold that the department is free to invoke extended period in the subsequent show cause notices. However, as per our discussion above, we have held that the credit is admissible to the appellants and as such the appeal survives on merits and any findings on limitation etc. would be redundant. As we hold that the impugned order does not survive on merits (except for the credit availed by the appellants on services relating to dismantling of towers), the question of imposition of any penalty does not arise. 14. In view of our discussions above, we set aside the impugned order, except to the extent of confirmation of credit availed on services relating to dismantling of towers fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
