2026 (3) TMI 982 - AT - Service Tax

Cenvat credit on telecom towers and shelters confirmed; dismantlable goods and related input services qualify when used for taxable services.

CENVAT credit on telecom towers and prefabricated shelters is clarified as admissible because such structures, being bolted and capable of dismantling, ... Denial of Cenvat Credit availed with respect to capital goods and inputs pertaining to towers & shelters - Denial of Cenvat Credit availed with respect to input services pertaining to towers & shelters - setting up passive infrastructure facility - integral use for output services - binding precedent - larger bench precedent. Entitlement to Cenvat credit on capital goods and inputs used for towers and prefabricated shelters - HELD THAT:- The Tribunal held that the question whether towers and prefabricated shelters constitute goods eligible for Cenvat credit is no longer res integra. The decision follows the Hon'ble Supreme Court in M/s Bharti Airtel Ltd v. CCE, Pune [2024 (11) TMI 1042 - SUPREME COURT] which ruled that such towers and shelters are not immovable property, can be dismantled and relocated, and are indispensable for functioning of antennas; accordingly they qualify as goods used in providing the output service and attract Cenvat credit. The Tribunal also relied on the Jurisdictional High Court decision in Commr of CGST, Gurugram v. Bharti Infratel Ltd and its own earlier precedents in the assessee's cases holding similar principles, and applied those ratios to set aside the impugned orders denying credit. [Paras 6, 7, 9] Assessees are entitled to Cenvat credit on the capital goods and inputs relating to towers and shelters; impugned denials on this ground set aside. Entitlement to Cenvat credit on input services used for setting up and operating telecom towers and shelters - HELD THAT: - The Tribunal held that the admissibility of credit on input services for towers and shelters is also settled. It followed the Larger Bench decision in Idea Cellular Ltd v. CST, Mumbai-IV [2024 (4) TMI 1314 - CESTAT MUMBAI (LB)] which construed the expression 'input service' broadly and held that input services used in setting up and operating telecom towers qualify for credit when used in the course of providing taxable output services. The Tribunal noted subsequent pronouncements of various benches following that Larger Bench and applied that settled ratio to allow credit. [Paras 6, 8, 9] Assessees are entitled to Cenvat credit on input services relating to towers and shelters; impugned denials on this ground set aside. Final Conclusion: Following binding and subsequent judicial precedents, the Tribunal allowed the assessee appeals holding entitlement to Cenvat credit on inputs, capital goods and input services used for telecom towers and shelters for the periods in dispute, and dismissed the Revenue's cross appeals challenging the OIOs which had dropped demands. Issues: (i) Whether CENVAT credit is admissible on capital goods and inputs pertaining to telecom towers and shelters; (ii) Whether CENVAT credit is admissible on input services pertaining to telecom towers and shelters.Issue (i): Whether CENVAT credit is admissible on capital goods and inputs pertaining to telecom towers and shelters.Analysis: The Tribunal considered binding decisions of the Hon'ble Supreme Court, relevant High Courts and precedents of this Tribunal addressing whether towers and prefabricated shelters qualify as goods under the Cenvat Credit Rules and whether they are integrally used in providing taxable telecommunication services. The authorities hold that such towers and shelters are not immovable property but goods capable of being dismantled and reassembled, and that their use is essential for rendering the output service of mobile telecommunications; consequently they qualify for credit under the Cenvat Credit Rules.Conclusion: In favour of the Assessee.Issue (ii): Whether CENVAT credit is admissible on input services pertaining to telecom towers and shelters.Analysis: The Tribunal followed the Larger Bench and subsequent authorities holding that the expression 'input service' has a wide ambit and includes services used for setting up, operation and maintenance of telecom towers and shelters, provided such services are used in the course of providing taxable output services. The cited precedents were applied to the facts to determine entitlement to credit on input services.Conclusion: In favour of the Assessee.Final Conclusion: The appeals filed by the Assessees challenging denial of CENVAT credit on inputs, capital goods and input services are allowed; the Revenue's appeals against the demands dropped by the adjudicating authority are dismissed.Ratio Decidendi: Towers and prefabricated shelters that are bolted and capable of dismantling are 'goods' and not immovable property, and input services having an integral and direct connection with providing taxable output services qualify as 'input services' under the Cenvat Credit Rules, 2004; hence such goods and services are eligible for CENVAT credit when used in providing taxable output services.