Mumbai CESTAT disallows CENVAT credit on telecommunication towers and pre-fabricated buildings/shelters to telecom service operators

CESTAT disallows CENVAT credit on telecommunication towers and pre-fabricated buildings/shelters to telecom service operators 

 

This Tax Alert gives an update on the decision of the Mumbai CESTAT wherein it disallowed CENVAT credit on telecommunication towers and pre-fabricated buildings/shelters to telecom service operators. Appeals of various applicants are taken up together for disposal and a common order is passed.

 

CESTAT observed that towers are covered under Chapter 73 and pre-fabricated shelters are covered under Chapter 94 of the Central Excise Tariff Act, 1985. The definition of capital goods does not include these two chapters. Consequently, towers and shelters are not capital goods in the form as they were received.

 

Reliance was placed on the decision in the case of Bharti Airtel Ltd vs Commissioner of Central Excise [2014-TIOL-1452-HC-MUM-ST] and State of Andhra Pradesh vs Bharat Sanchar Nigam Ltd [2012-25-STR-321-AP] , wherein it was held that towers are immovable property and hence can neither be regarded as ‘capital goods’ nor ‘inputs’.

 

CESTAT held that since the issue involved in the present case is covered by the judgment of the Bombay High Court in the case of Bharti Airtel (supra), judicial discipline demands that the ratio of the jurisdictional High Court needs to be followed.