Custom, Excise & Service Tax Tribunal
Essar Telecom Infrastructure Pvt. Ltd vs Commissioner Of Service Tax, Mumbai-I on 30 April, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal Nos.ST/636/2012-MUM & ST/85481/2014-MUM (Arising out of Order-in-Original No. 33/ST/SB/2011-12 dt. 29.2.2012 and OIO NO. 68/ST-II/RS/2013 dt.31.10.2013 passed by the Commissioner of Service Tax, Mumbai ) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S.Pruthi, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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Essar Telecom Infrastructure Pvt. Ltd.
:
Appellant
Reliance Communication Infrastructure Ltd.
VS
Commissioner of Service Tax, Mumbai-I
:
Respondent
Appearance
Shri Gajendra Jain Advocate
Shri Naresh Thacker, Advocate for Appellant
Shri D. Nagvenkar, Commissioner (A.R) for respondent
CORAM:
Mr. M.V. Ravindran, Member (Judicial)
Mr. P.S.Pruthi, Member (Technical)
Date of hearing : 30/04/2015
Date of decision : 30/04/2015
ORDER NO.
Per : M.V. Ravindran
These two appeals are disposed of by a common order as the issue raised is the same.
2. These appeals are filed against Order-in-Original No. 33/ST/SB/2011-12 dt. 29.2.2012 and OIO No. 68/ST-II/RS/2013 dt.31.10.2013.
3. Relevant facts that arise for consideration are the appellants herein are providers of Telecom Infrastructure. They owned and lease out the towers to various telecom companies. They discharge the service tax liability under the category of Business Support Services. Appellant herein availed Cenvat Credit of the Central Excise 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. Lower authorities were of the view that the Cenvat Credit availed by the appellants is inadmissible. After conducting investigation, show cause notices were issued for demanding the Cenvat Credit so availed by the appellants interest thereof and also for imposition of penalties. Both the appellants contested the show cause notice on merits, taking a plea that the said towers which are constructed/erected are required for providing of output service namely Business Support Services. Adjudicating authority did not agree with the contentions raised by the appellant. After following the due process of law confirmed demand raised along with interest and imposed penalties.
4. Ld. Counsel appearing on behalf of the appellants would take us through the entire case records. It is submitted that the issue is now settled by the direct judgment of the Tribunal in the case of GTL Infrastructure Ltd. Vs. Commissioner of Service Tax, Mumbai 2014-TIOL-1768-CESTAT-MUM and Reliance Infratel Ltd. Vs. Commissioner of Service Tax, Mumbai 2015-TIOL-516-CESTAT-MUM. It is also their submission that the Revenues case is also hit by limitation and in the case of Essar Telecom Ltd., there is duplication of demand inasmuch that appellant had availed Cenvat Credit of the capital goods in the first year which was 50% of the duty paid on capital goods and the next 50% in the subsequent financial year which was considered by the department as wrong availment of Cenvat Credit. It is his submission that the first credit taken of the first 50% is itself contested by the department on the ground that the towers which are constructed/erected are immoveable goods and cenvat credit cannot be availed.
5. Ld. AR would submit that the appellants herein had created an immoveable property i.e. towers and the same cannot be considered as inputs for providing output services. It is his submission that the appellant had created immoveable property which cannot be considered as being used for providing of output service, as the said towers have been embedded in the earth and cannot be removed easily without wear and tear. He would submit that Honble High Court of Bombay in the case of Bharti Airtel Ltd. Vs. Commissioner of Central Excise, Pune-III 2014 (35) STR 865 (Bom.) was considering the issue of eligibility to avail Cenvat Credit on the towers as capital goods as well as inputs, denied the Cenvat Credit holding that towers are immoveable property. He would submit that the latest judgment of the Tribunal in the case of Tata Teleservices Ltd. Vs.CST 2015-TIOL-628-CESTAT-MUM is also following the law laid down by the Honble High Court in the case of Bharti Airtel Ltd. He would submit that GTL Infrastructure Ltd. judgment is sub-silentio and hence does not have any precedential value and the Reliance Infratel Ltd. judgment follows GTL Infrastructure Ltd. distinguishing the High Court judgement in the case of Bharti Airtel Ltd. is also incorrect as appellants are trying to avail Cenvat Credit which is not allowed directly, cannot become admissible by following an indirect approach. It is his submission that the judgment of the Tribunal in the case of Mundra Port & Special Economic Zone Ltd. 2009 (13) STR 178 (Tri.Ahmd.) and Gujarat State Petronet Ltd. 2013 (32) STR 510 (Tri.-Ahmd.) clearly lays down a ratio of nexus for the availment of the Cenvat Credit. He would also read the definition of input services after 1.4.2011 is important. He would also submit that as per the provisions of Section 94, is the empowering Section which grant, power for making Cenvat Credit Rules, has to be read that consumption of inputs or capital goods in the provisions of output services. He would also submit that the facts of the case of Sai Samhita are totally different than the facts in hand in these cases.
6. The Ld. Counsel rejoinder would only submit that as per Section 94 of the Finance Act, 1994, Rules could have been framed for direct consumption of the services for output services, to consciously, legislature in the definition of input services but Cenvat Credit Rules have used the word use which would mean that the legislature wanted to give a practical meaning as to the eligibility to avail Cenvat Credit on inputs, capital goods and input services to the output service provider. It is the submission that order of Tribunal in the case of Mundra Port & Special Economic Zone Ltd. (supra) as cited by learned D.R. is set aside by the Honble High Court of Gujarat in an unreported judgement dated 29.04.2015 and undertakes to submit a copy of judgement, which he did.
7. We have considered the submission made at length by both sides and perused the records.
8. The only dispute in these cases is regarding the availment of Cenvat Credit on the capital goods and the input services by both the appellants.
9. It is undisputed that both the appellants are registered with the department for discharge of service tax under the category of Business Support Services. It is also undisputed that the appellants have constructed/erected towers and created such telecom infrastructure, they were providing output services to their client and customers who are telecom companies. The telecom companies are charged by the appellant for using the towers based upon the understanding between them. The appellants had contested the findings before us on the ground that the capital goods, inputs and input services have been used by them for construction and erection of telecom towers which is in turn is used by them for providing output service under the category of Business Support Services to the various telecom companies.
10. We find that an identical issue came up before the Bench in the case of GTL Infrastructure Ltd. wherein the Bench took a view that appellant therein is eligible for availment of Cenvat Credit on capital goods. We find that the Bench in the case of Reliance Infratel Ltd. (supra) followed the ratio in the case of GTL Infrastructure Ltd. In the case of Reliance Infratel Ltd., we find that the Ld. DR had also cited the judgment of the Honble High Court of Bombay in the case of Bharti Airtel Ltd.. The Bench after considering all the submissions made by the Ld. AR, which were the same as is being canvassed today before us, by the Ld. AR, discarded arguments made by the Ld. AR for the reliance placed on the judgment of the Honble High Court in the case of Bharti Airtel Ltd. by recording the following :
In both the? appeals, the appellant has claimed support in the above context from the following decisions :-
(i) Indian Copper Corporation Ltd. v. Com. of Commercial Taxes [1965 (16) STC 259 (SC)]
(ii) J.K. Cotton Spinning and Weaving Mills Co. Ltd. v. STO [1997 (91) E.L.T. 34 (S.C.)]
(iii) Jawahar Mills Ltd. v. CCE [1999 (108) E.L.T. 47 (Tri.-LB)]
(iv) Industrial Machinery Manufacturers Pvt. Ltd. v. State of Gujarat [1965 (16) STC 380 (Guj.)] In respect of? PFB, the appellant points out that CCE, Meerut-I vide Order-in-Original No. 4-5/Commissioner/MRT-I/07, dated 31-1-2007 held that, as a part of BTS which was eligible capital goods, PFB was essential in providing output service and therefore the duty paid thereon would be available as credit to the telecom operator.
Alternatively,? the appellant has contended that the tower (and parts thereof) and the PFB would also qualify as inputs used for providing output service. This contention is based on sub-clause (ii) of clause (k) of Rule 2 (definition of input) of the CENVAT Credit Rules. In this connection, the appellant has relied on the following decisions :
(i) CCE v. Modi Rubber Ltd. [2000 (119) E.L.T. 197 (Tri.-LB)]
(ii) CCE v. Zenith Papers [2002 (146) E.L.T. 518 (P & H)].
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. judgenment of the Honble 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.
11. As regards the arguments put forth by the Ld. AR, we find that the same does not carry the case of the Revenue any further, inasmuch, in the case of Tata Teleservices Ltd., (one of us was the member), the issue was the appellants therein 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 Honble High Court of Bombay in the case of Bharti Airtel Ltd. which was on the same issue. As we have already stated hereinabove that the issue involved in this 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; accordingly the ratio of the judgment of Honble High Court may not apply in the cases in hand. As also the argument of learned AR that order of Tribunal in the case of Mundra Port & Special Economic Zone Ltd. is set aside by the High Court by a judgment dated 29.4.2015.
12. In view of the foregoing and the authoritative to judicial pronouncement on identical set of facts, we find that the impugned orders are unsustainable and liable to be set aside, we do so. As we have disposed of the appeal on merits itself, we are not recording any findings on various other issues raised by both sides.
13. Appeals allowed with consequential relief if any.
(Pronounced in court) (P.S.Pruthi) Member (Technical) (M.V. Ravindran) Member (Judicial) Sm ??
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