The Chhattisgarh High Court has allowed CENVAT Credit to Bharat Sanchar Nigam Limited (BSNL) on the tower and prefabricated buildings used for providing mobile telecommunication services.
The bench of Justice Sanjay K. Agrawal and Justice Amitendra Kishore Prasad has relied on the decision of Supreme Court in the case of Bharti Airtel Ltd. versus Commissioner of Central Excise, Pune observed that the tower and pre- fabricated buildings (PFBs) are “goods” and not immovable property and since these goods are used for providing mobile telecommunication services, the inescapable conclusion is that they would also qualify as ‘inputs’ under Rule 2(k) for the purpose of credit benefits under the CENVAT Rules.
The appellant/assessee, BSNL was the holder of Service Tax Registration for providing telecommunication service and was availing CENVAT credit on capital goods and input services in terms of CENVAT Credit Rules, 2004 (CCR-2004).
The appellant during the period 2005-06 to 2007-08 availed CENVAT credit on tower materials/shed and parts thereof and pre- fabricated building materials classifiable under Chapters 72, 73 and 94 of the Central Excise Tariff Act, 1985.
During the course of audit, the department was of the opinion that the tower materials/shed and parts thereof and pre-fabricated building materials were covered neither in the definition of the capital goods nor used as inputs for the Rules of CCR-2004 respectively.
The department was of the opinion that the CENVAT credit of duty paid paid on the capital goods was admissible only on the receipt and use of the said capital goods in the premises of the service provider. As per the department the CENVAT credit was availed by the Appellant during the period 2005-06 to 2007-08 was not admissible to them and accordingly the Respondent reversed the CENVAT credit of Rs.89,81,109/-.
The Appellant had availed CENVAT credit of Rs.1,07,27,241/- during the period 2006-07 and 2007- 08 on the basis of ‘transfer advices’. Appellant-BSNL had also availed CENVAT Credit of Rs.62,01,384/- on the capital goods which were not received/used by them but used by their other offices (Bilaspur, Durg, Bhilai etc.) which was not admissible to them.
The Appellant had himself had adjusted an amount of service tax paid earlier in their ST-3 returns for the period October, 2006 to March, 2007 but could not produce any evidence that the excess service tax collected earlier from their customers has been refunded to their customers.
Therefore, Show-Cause Notice was issued to the Appellant proposing disallowance and recovery of the wrongly availed CENVAT credit along with applicable rate and penalty.
The court allowed the appeal of the BSNL.
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Case Details
Case Title: Bharat Sanchar Nigam Limited Versus Commissioner, Central Excise & Customs
Case No.: Tax Case No. 33 Of 2018
Date: 13-12-2024
Counsel For Appellant: Sandeep Dubey
Counsel For Respondent: Ashutosh Singh
