2018 (6) TMI 747 - AT - Service Tax

Tribunal bars recovery of Cenvat Credit beyond limitation period due to unsettled issue

Bharti Hexacom Ltd Versus C.C.E. & S.T. -Jaipur

The Tribunal allowed the appeal, holding that the demand for recovery of Cenvat Credit beyond the normal period of limitation was barred due to the ... CENVAT credit - tower and tower materials, which were used by the appellant for providing telecommunication service - time limitation - Held that:- The issue was considered by the Larger Bench of the Tribunal in the case of Tower Vision India Pvt. Ltd [2016 (3) TMI 165 - CESTAT NEW DELHI (LB)], in which it was held that as the 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 service' in the other, the towers and shelters and parts are decided to be immovable property - credit not allowed. Time Limitation - Held that:- whether the demand for recovery of Cenvat Credit availed on such inadmissible Cenvat Credit is barred by limitation or otherwise? - Held that:- 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 - 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. Appeal allowed - decided in favor of appellant. Issues:Admissibility of Cenvat Credit on tower and tower materials for providing telecommunication services; applicability of extended period of limitation for demand of Service Tax.Analysis:1. Admissibility of Cenvat Credit on tower and tower materials:The appellant, a Telecommunication Service provider, availed Cenvat Credit on tower and tower materials during the disputed period. The issue revolved around whether such credit was admissible as inputs and capital goods. The appellant argued for admissibility citing various case laws and emphasizing the lack of specific allegations of suppression against them. The Larger Bench's decision in the Tower Vision India Pvt. Ltd. case was referred to, which concluded the issue against the assessee. However, conflicting decisions from different High Courts during the relevant period highlighted the uncertainty surrounding the admissibility of such credit. Despite the Larger Bench ruling against the appellant, the Tribunal held that prior to such a declaration of law, no malafide could be attributed to the assessee based on the Continental Foundation Joint Venture case law.2. Applicability of extended period of limitation:The Revenue contended that the demand for recovery of Cenvat Credit availed on inadmissible items was justified under the extended period of limitation due to alleged suppression of facts by the appellant. The Adjudicating Authority noted the absence of details of the documents supporting the credit in the appellant's returns. However, the Tribunal observed that the issue of admissibility was a subject of dispute with conflicting decisions by different High Courts, leading to the matter being referred to the Larger Bench. Considering the unsettled nature of the issue during the relevant period, the Tribunal held that the demand beyond the normal period of limitation was barred by limitation. The impugned order was set aside, and the appeal was allowed based on this ground.In conclusion, the judgment addressed the admissibility of Cenvat Credit on specific items for telecommunication services and the applicability of the extended period of limitation for the demand of Service Tax. The conflicting decisions and the subsequent Larger Bench ruling underscored the uncertainty surrounding the issue, leading to the Tribunal's decision in favor of the appellant based on the limitation bar.