By TIOL News Service

MUMBAI, JUNE 15, 2015: THE appellants are providers of Telecom Infrastructure. They owned and leased out towers to various telecom companies. Service tax liability was discharged by the appellants under the category of Business Support Services.

They had availed Cenvat Credit of the CE duty paid on the capital goods and the input services utilized by them for constructing / erecting the towers which are either ground based towers or roof top towers.

The aforesaid availment and utilization of CENVAT was objected to by the adjudicating authority who confirmed the demands.

Before the CESTAT, the appellants submitted that the issue is now settled by the direct judgment of the Tribunal in the case of GTL Infrastructure Ltd. - 2014-TIOL-1768-CESTAT-MUM and Reliance Infratel Ltd. - 2015-TIOL-516-CESTAT-MUM. It is also their submission that the Revenue's case is also hit by limitation and in the case of the appellant Essar Telecom Ltd., there is duplication of demand inasmuch as the appellant had availed Cenvat Credit of the capital goods in the first year which was 50% of the duty paid and the next 50% in the subsequent financial year which was considered by the department as wrong availment of Cenvat Credit.

The AR submitted that the appellants had created an immovable property i.e. towers and the same cannot be considered as inputs for providing output services, as the said towers have been embedded in the earth and cannot be removed easily without wear and tear. Reliance is placed on the decisions in Bharti Airtel Ltd. - 2014-TIOL-1452-HC-MUM-ST, Tata Teleservices Ltd. - 2015-TIOL-628-CESTAT-MUM & Mundra Port & Special Economic Zone Ltd. - 2009-TIOL-1725-CESTAT-AHM in support of the stand taken by the department.

The appellant in their rejoinder submitted that the Tribunal order in case of Mundra Port (supra) has been set aside by the Gujarat High Court - 2015-TIOL-1288-HC-AHM-ST.

The Bench adverted to the decisions in the case of GTL Infrastructure Ltd. & Reliance Infratel Ltd. & after extracting the same observed -

++ It can be seen from the above reproduced ratio that the identical issue has been decided by the two judgments of this Tribunal one prior to Bharti Airtel Ltd. judgement of the Hon'ble High Court and one post and the same was held in favour of the assessee. We do not find any reason to deviate from such a view already taken.

The judgments cited by the AR were distinguished by observing that the issue therein was that the appellants were telecom service providers and had constructed/erected the towers on their own and availed Cenvat Credit of the Towers, cabins which was not accepted by the bench relying on the judgment of the High Court of Bombay in the case of Bharti Airtel Ltd. which was on the same issue. It was also observed that the issue involved in the present case is regarding the services rendered by the appellants as 'infrastructure service providers' and not as 'telecom service provider' and are providing 'business support service' in form of infrastructure service.

Holding that the orders were not sustainable, the same were set aside and the appeals were allowed with consequential relief.

In passing: What cannot be done directly can, after all, be done indirectly…

(See 2015-TIOL-1132-CESTAT-MUM)