2025 (1) TMI 1373 - AT - Service Tax

CENVAT credit allowed on angles, channels, beams for mobile tower construction as capital goods not immovable property

M/s Vodafone Essar South Ltd. Versus Commissioner of Central Tax, Secunderabad– GST

M/s Vodafone Essar South Ltd. Versus Commissioner of Central Tax, Secunderabad– GST - TMI ISSUES PRESENTED and CONSIDEREDThe primary issue considered in this case was whether the inputs such as angles, channels, and beams used in the erection of mobile towers and prefabricated buildings/shelters, which are utilized for housing and storage of generator sets and equipment, qualify for CENVAT credit. The core question was whether these items should be treated as immovable goods, thereby disqualifying them from credit eligibility, or as movable goods, allowing for such credit under the CENVAT Rules.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework centered around the interpretation of 'goods' under the CENVAT Rules, specifically the definitions provided in Rule 2(a)(A) for 'capital goods' and Rule 2(k) for 'inputs.' The precedents include the Supreme Court's decision in the Bharti Airtel case, which dealt with similar issues regarding the classification of mobile towers as movable or immovable goods.Court's Interpretation and ReasoningThe Tribunal relied heavily on the Supreme Court's findings in the Bharti Airtel case, where it was determined that mobile towers are not immovable goods. The Supreme Court applied tests of permanency, intendment, functionality, and marketability to conclude that mobile towers and prefabricated buildings are movable. The Tribunal adopted this reasoning, noting that the towers could be dismantled and relocated without damage, indicating their movability.Key Evidence and FindingsThe Tribunal considered the nature of the mobile towers' attachment to the land, noting that the annexation was not for permanent enjoyment of the land or building. The capability of the towers to be dismantled and sold in the market further supported their classification as movable goods.Application of Law to FactsApplying the legal principles outlined by the Supreme Court, the Tribunal concluded that the mobile towers and prefabricated buildings qualify as 'goods' under the CENVAT Rules. Consequently, the inputs used for their erection, such as angles, channels, and beams, are eligible for CENVAT credit.Treatment of Competing ArgumentsThe Department's argument that the mobile towers should be treated as immovable goods was countered by the Tribunal's reliance on the Supreme Court's precedent, which clearly classified these structures as movable. The Tribunal found no merit in the Department's position and dismissed it in favor of the appellant's argument.ConclusionsThe Tribunal concluded that the denial of CENVAT credit by the Department was unsustainable. The inputs used in the erection of mobile towers and prefabricated buildings are eligible for credit as they qualify as 'goods' under the CENVAT Rules.SIGNIFICANT HOLDINGSThe Tribunal's decision was significantly influenced by the Supreme Court's reasoning in the Bharti Airtel case. The core principle established is that mobile towers and prefabricated buildings, being movable, qualify as 'goods' and thus are eligible for CENVAT credit. The Tribunal's final determination was to allow the appeal, thereby granting the appellant the right to avail of the CENVAT credit on the disputed inputs.The Tribunal's decision underscores the importance of adhering to established legal precedents and highlights the criteria for determining the movability of structures like mobile towers within the context of tax credits under the CENVAT Rules.