Custom, Excise & Service Tax Tribunal
Bharti Hexacom Ltd vs Jaipur-I on 12 June, 2018
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Block No.2, R. K. Puram, New Delhi,
COURT -II
Date of hearing/decision: 12.06.2018
Appeal No. ST/52170/2015-CU [DB]
[Arising out of Order-in-Appeal JAI-EXCUS-000-COM-90-14-15 dated
12/03/2015 passed by the Commissioner of Central Excise and Service Tax-
JAIPUR-I (Appeal)
Bharti Hexacom Ltd Appellant
Vs.
C.C.E. & S.T.-Jaipur-i Respondent
Appearance:
Shri Narendra Singhvi, CA for the appellant Shri Sanjay Jain, AR for the Respondent Coram:
Hon'ble Mr. V. Padmanabhan, Member (Technical) Hon'ble Ms. Rachna Gupta, Member (Judicial) Final Order No._52226/2018__ Per: V. Padmanabhan:
1. The present appeal challenges the Order-in-Original No. 19/2014-15 dated 28-02-2015. The appellant is Telecommunication Service provider and is discharging the Service Tax liabilities on the telecommunication services provided by it. During the disputed period -01/09/2004 to 31/03/2006, the appellant availed Cenvat Credit on tower and tower materials, which were used by the appellant for providing telecommunication service. Proceedings were initiated against the appellant proposing to deny Cenvat Credit and to recover the same along with interest and penalties, vide show cause notice dated 14/02/2008.
The said proposals have been confirmed vide the impugned order against which the appellant has filed the present appeal.
2. In this connection we heard Shri Narender Singhvi, Ld. Counsel for the appellant as well as Shri Sanjay Jain, Ld DR for the Revenue.
2 | ST/52170/2015-CU [DB] Page
3. The submissions advanced on behalf of the appellant are summarized below:-
i. The Ld. Advocate submitted that the Cenvat Credit on the subject items is admissible to the appellant both as inputs and capital goods. He reiterated the grounds of appeal already filed. He particularly emphasized the fact that the demand has been raised by invoking the extended period of limitation under Section 73 of the Finance Act. He referred to various case laws and submitted that the allegations of suppression against the appellant cannot be sustained. Even in the show cause notice, no specific allegations have been made against the appellant. He further argued that the dispute regarding the availability of Cenvat Credit on tower and tower materials was also the subject matter of various decisions. In view of the fact that there were contrary decisions on the subject by various Hon'ble High Courts, the issue was referred to Larger Bench of the Tribunal and the said Tribunal decided the issue vide Tower Vision India Pvt. Ltd. V/s Commissioner of C. EX., Delhi reported in 2016 (42) STR 249 (Tribunal-LB).
ii. The Ld. Advocate further submitted that the demand under the extended period is not justified and within the normal period of limitation no demand for Service Tax will survive.
4. The Ld. DR for Revenue submitted that the issue has been decided in favour of Revenue by decision of Larger Bench in the case of Tower Vision India Pvt. Ltd. (supra). Further he argued that the demand is sustainable under the extended period of limitation. In this connection he specifically referred to findings of Adjudicating Authority in para 26 of the impugned order in which he has recorded that the 3 | ST/52170/2015-CU [DB] Page details of the documents on the strength of which credit has been taken is not reflected in the ST-3 Returns filed by the appellant. He also relied on the decision of the Hon'ble Allahabad High Court in the case of Commissioner of Cus. & C. EX., Ghaziabad V/s Rathi Steels & Power Ltd. 2015 (321) ELT 200 (All.) in which the Hon'ble High Court has decided, in similar situation that the Revenue will be entitled to raise the demand under extended period of limitation. Finally, he submitted that the impugned order may be upheld.
5. After hearing both sides and perusal of record we note that the issue involved in the present case is the admissibility of Cenvat Credit on tower and tower materials which were used for providing Telecommunication Service. The issue was considered by the Larger Bench of the Tribunal in the case of Tower Vision India Pvt. Ltd (Supra) in which the Larger Bench observed :-
"41. In our respectful view however the challenge to the ratio and conclusions of the High Court's decisions in Bharti Airtel Limited and Vodafone India Limited, on the ground that these are predicated on an incorrect and impermissible interpretation of the rationes in Solid & Concrete Engineering Works, must await an appellate consideration, when and if challenged, by the Hon'ble Supreme Court. It is outside the province and jurisdiction of this Tribunal to analyse and record a ruling on a superior Court's analyses and elucidation of other binding precedents. The A.P. High Court's judgment in BSNL, in the context of levy of VAT, concluded that towers are immovable property, after noticing and adverting to the judgment in Solid & Correct Engineering Works. Though, the Solid & Concrete Engineering Works ruling of the Hon'ble Supreme Court was neither specifically referred to nor analysed in the Bharti Airtel Limited ruling, it was specifically considered in the later decision in Vodafone India Limited. Nevertheless, the Hon'ble High Court was pleased to reiterate and affirm its earlier decision in Bharti Airtel Limited, to conclude in conformity therewith. If the Hon'ble High Court was not persuaded to reconsider, while adjudicating the lis in Vodafone India Limited, its earlier decision in Bharti Airtel Limited on a premise that its earlier decision might have been incongruous with the ratio of the Apex Court's decision in Solid & Correct Engineering Works, it is clearly beyond the province of this Tribunal to embark upon such an exercise, on any grounds, including the per incuriam principle.
42. On the above analysis, we conclude that the Hon'ble Bombay High Court judgments in Bharti Airtel Limited and Vodafone India Limited, which are directly on the issue of the character of towers and shelters and parts, and held to be immovable property, constitute the binding law, insofar as we are concerned. Since the provision of towers and shelters as infrastructure used in the rendition of an output service is common to both passive and active infrastructure providers, whether of "BAS" or "BSS" in one case and "telecom 4 | ST/52170/2015-CU [DB] Page service" in the other, consequences of the application of the above Hon'ble High Court's rulings, would not be different
44. In the light of the above analysis and conclusions recorded in the lead opinion by Hon'ble Mr. B. Ravichandran and the concurrent opinion recorded by the Hon'ble President, the two issues on which difference of opinion had arisen vide the interim order dated 28-7-2015 and stand referred for resolution by this Larger Bench, are answered in favour of Revenue and against assessees. Regarding the 8 tagged appeals, we are of the considered view that the referred issues and conclusions recorded by us on these, in the appeals arisen pursuant to the difference of opinion recorded, will govern resolution of these issues presented in the tagged appeals, as well. Therefore the 8 tagged appeals are remitted to the appropriate Division Bench for determination on merits, i.e., ST Appeal No. 55227/2013 and ST Appeal Nos. 51115, 51211, 51721, 51729, 52377, 52378 and 52382 of 2015."
6. It is seen that the Larger Bench has decided the issue of admissibility of Cenvat Credit against the assessee.
7. Since the issue is decided against the appellant on merit, the limited issue that remains for determination is whether the demand for recovery of Cenvat Credit availed on such inadmissible Cenvat Credit is barred by limitation or otherwise. It is the case of Revenue that the Respondent had not disclosed the details of the inputs and capital goods in their periodic returns resulting in suppression of facts and hence extended period of limitation is applicable to the facts of the present case. But we note that the issue of admissibility of Cenvat Credit was in dispute for a considerable period of time. There were conflicting decisions on the issue. The Hon'ble Bombay High court in the case of Bharti Airtel Ltd. was held that such Cenvat Credit was not admissible. However, the Hon'ble High Court of Gujarat in the case of Mundra Special Economic Zone held that the Cenvat Credit was admissible. Hence, during the relevant period the dispute was the subject matter of various contrary decisions which ultimately led the matter to be referred to the Larger Bench. Though the Larger Bench decision is against the appellant on merits, but in view of the law settled by the Hon'ble Supreme Court in its decision in the case of Continental Foundation Joint Venture V/S Commissioner 2007 5 | ST/52170/2015-CU [DB] Page (216) ELT 0177 (SC) it stands decided that prior to such declaration of law by the Larger Bench, no malafide can be attributed to the assessee.
8. In view of the above we are of the view that demand beyond the normal period of limitation will be hit by bar of limitation. Since the entire demand falls outside the scope of normal period of limitation, the impugned order is set aside and appeal is allowed.
(Dictated and pronounced in the open Court)
(Rachna Gupta) (V. Padmanabhan)
Member (Judicial) Member (Technical)
Rekha