Service tax – Cestat New Delhi: Cenvat credit available to Vodafone on Towers, Tower material and shelters - Towers and shelters are not per se immovable property, as they cannot be said to be “attached to the earth” - Towers and shelters plainly act as components/ parts and as accessory to the equipment and would be covered under the definition of “capital goods”: Appeal allowed. [Order Attached dated 23 September 2022]
Order date – 23 September 2022
- The Appellant, M/s Vodafone Mobile Services Limited, is a provider of telecommunication services to customers and business support services to fellow telecommunication service providers.
- The appellant as a provider of output services, availed Cenvat Credit on inputs, input services and capital goods under the 2004 Rules.
- The Commissioner adjudicating the twelve show cause notices by confirming the denial of Cenvat Credit on inputs, input services and capital goods used by the appellant for provision of telecommunication services.
- Aggrieved, the appellant filed an appeal.
- Whether the appellant is eligible to claim Cenvat Credit on tower, tower material, shelter, input services for the period from October 2004 to March 2012 and April 2014 to March 2015?
- The Tribunal relied on the case of Sirpur Paper Mills Ltd. vs. Collector of Central Excise, Hyderabad wherein the Supreme Court observed that merely because a machine is attached to earth for more efficient working and operations it would not per se become immovable property.
- Further, the decision of the Delhi High Court in Vodafone Mobile Services Limited v. CST, Delhi,  would have to be followed in which it was held that the towers too have to be considered as essential components/ part of the capital goods, namely BTS and antennae.
- The 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 be covered by the definition of “capital goods”.
- The Tribunal held that since the tower/tower material and prefabricated buildings/shelters are “capital goods”, the appellant is entitled to claim Cenvat Credit.
- In the jurisdictional issue it was held that when a Jurisdictional High Court has expressed any view in regard to the issue and conflicting views have been taken by High Courts, other than the Jurisdictional High Court, then the Tribunal will follow the jurisdictional High Court.
- Appeal allowed.