Cenvat credit for telecom towers upheld where construction inputs supported taxable Business Support Services and denial was set aside.

Cenvat credit on capital goods and input services used to construct and erect telecom towers was treated as admissible where the towers were deployed for providing Business Support Services. The Tribunal followed its earlier decisions on identical facts and accepted that the towers and related infrastructure formed part of the service-providing activity, so the credit could not be denied merely on the basis that the towers were alleged to be immovable property. The contrary reliance on the Bombay High Court decision was found not to assist the Revenue on these appeals, and the denial of credit, interest and penalties was set aside.

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Issues: Whether Cenvat credit was admissible on capital goods and input services used for constructing and erecting telecom towers for providing Business Support Services.

Analysis: The appellants were infrastructure service providers registered for Business Support Services and had erected towers used for supplying that output service to telecom companies. The dispute concerned whether the credit taken on capital goods and input services used in construction and erection of the towers could be denied on the ground that the towers were immovable property. The Tribunal followed its earlier decisions on identical facts, including the view that the towers and related infrastructure were used in the course of providing the taxable output service, and held that the contrary reliance on the Bombay High Court decision did not assist the Revenue on the facts of these appeals.

Conclusion: Cenvat credit was held to be admissible, and the denial of credit, interest, and penalties was set aside in favour of the assessees.

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