The Customs, Excise & Service Tax Appellate Tribunal, New Delhi, held that the Bharat Sanchar Nigam Limited Entitled (BSNL) is entitled to CENVAT credit on tower materials.
The bench observed that it clearly transpires from a perusal of the order passed by the Tribunal in Vodafone Mobile Services, that the appellant would be entitled to CENVAT credit on the tower materials. The Tribunal relied upon the decision of the Delhi High Court in the case of the appellant in Vodafone Mobile Services Ltd. vs. CST, Delhi.
The Delhi High Court in the case of the appellant in Vodafone Mobile Services Ltd. vs. CST, Delhi has held that the towers and pre-fabricated shelters form an essential in the provision of telecommunication service. The CESTAT – in the opinion of this Court – failed to appreciate that it is well settled that the word “used” should be understood in a wide sense, so as to include passive as well as active use. The towers in CKD condition are used for the purpose of supplying the service and therefore, would qualify as ‘inputs’. There is actual use of the tower and shelters in conjunction with the Antenna and the BTS equipment in providing the output service, which also includes provision of the Business Support Service.
The tribunal observed that the decision of the Tribunal in Vodafone Mobile Services holds that tower materials would qualify as ‘inputs’ under rule 2(k) of the CENVAT Rules and they would also be capital goods and, therefore, credit could be taken.
Facts
The appellant is engaged in providing telecommunication services. It availed CENVAT credit on receipt of various tower materials and prefabricated shelters (tower materials) falling under Chapter 73 of the First Schedule of the Tariff Act which materials were used in setting up of the ‘tower’ for transmission. The credit was availed treating the goods as capital goods. The issue that arises for consideration in this appeal is whether CENVAT credit would be admissible to the appellant on tower materials.
The show cause notices allege that since the tower materials made up of iron were neither covered under the definition of ‘capital goods’ nor under ‘inputs’, in terms of the definition under the CENVAT Rules, the same were to be disallowed and recovered with interest. It was further alleged that the appellant had deliberately suppressed facts relating to availment of such credit by not disclosing the same to the department and so the extended period of limitation was invocable. Penalty was also proposed to be imposed on the appellant.
The appellant submitted a reply and denied the allegations made in the show cause notices and stated that the goods in question were parts and components of ‘base trans receiver station (BTS)’, ‘base station controller (BSC) and mobile switching centre (MSC), which are tower materials. Thus, such tower materials would qualify to be capital goods under CENVAT Rules. The appellant, in the alternative, claimed that since the tower materials are ‘inputs’ used for providing of telecommunication services, they would be covered under the definition of ‘inputs’ under the CENVAT Rules.
Submissions
Om P. Agarwal, Chartered Accountant appearing for the appellant submitted that the issue involved in this appeal as to whether CENVAT credit would be admissible to the appellant on tower materials has been settled by a Division Bench of the Tribunal in Vodafone Mobile Services Ltd. vs. CCE, Jodhpur.
Anand Narayan, authorized representative appearing for the department has, supported the impugned order and has contended that it does not call for any interference in the appeal.
Conclusion
In view of the decision of the Tribunal in Vodafone Mobile Services, the tribunal set aside the order passed by the Commissioner (Appeals).
Case Details
Case Name: M/s GMTD Bharat Sanchar Nigam Limited v/s Commissioner of Central Goods and Service Tax, and Central Excise, Jodhpur
Citation: Service Tax Appeal No. 54034 of 2018
Tribunal: CESTAT, New Delhi
Judges: Justice Dilip Gupta, President and Mr. P.V. Subba Rao, Member (Technical)
Date Of Decision: 14.08.2024
