TaxTMI 
TaxTMI 
TaxTMI 
2023 (2) TMI 989
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....urpose, the appellant entered into 'Passive Infrastructure Sharing Agreement' with various telecom operators for setting up towers, shelter, diesel generator sets, air conditioner and electrical works, DC power plant, Battery Bank etc. and leasing of the same to these telecom operators. The appellant also provides operation and maintenance services with respect to infrastructure assets to the telecom operators. The appellant availed CENVAT credit of excise duty paid in respect of capital goods and inputs used in setting up such passive infrastructure. 3. During investigation, it was observed that the appellant had availed ineligible CENVAT credit. Accordingly, the following six show cause notices were issued to the appellant, seeking to deny CENVAT credit availed and utilised by the appellant in respect of inputs, capital goods and input services used in providing output services. S. No. Show Cause Notice Period 1 30.8.2010 2007-08 to 2009-10 2 21.10.2011 2010-11 3 28.8.2012 2011-12 4 26.6.2013 2012-13 5 17.4.2015 2013-14 6 21.4.2016 2014-15 4. The above six show cause notices were adjudicated upon by the Commissioner of Service Tax, Delhi [the Commissioner] ....
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....y the Delhi High Court in Vodafone Mobile Services Limited vs. CST, Delhi [2018-TIOL-2409-HC-DEL-ST], which decision was affirmed by the Supreme Court in Commissioner of Service Tax Delhi vs. Vodafone Mobile Services Limited [2019-TIOL-309-SC-ST]. 12. The first and fundamental issue that needs to be decided in the present appeal is as to whether towers are movable property or immovable property. This is for the reason that if they are immovable property, they would not be excisable goods. 13. Learned counsel for the appellant submitted that towers are not immovable structures and can be moved around from one place to another as per the needs of the appellant, since the mode of their installation is completely different from that of construction of a civil structure. The only activity of civil construction nature, if at all, is laying of the foundation for the tower. The main legs, which are also called as L-angled metal pieces, are fixed to the foundation stubs/anchor bolts and joined with bracing members to form the structure. The tower is formed by connecting all the L-angled metal pieces, which are tightened with nuts and bolts. These nuts and bolts can be unfastened and the d....
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....oming a part and parcel of the structures in which they were fitted were no longer movable goods. It was in those peculiar circumstances that the installation and erection of machines at site were held to be by this Court, to be immovable property that ceased to remain movable or marketable as they were at the time of their purchase. Once such a machine is fixed, embedded or assimilated in a permanent structure, the movable character of the machine becomes extinct. The same cannot thereafter be treated as movable so as to be dutiable under the Excise Act. But cases in which there is no assimilation of the machine with the structure permanently, would stand on a different footing. In the instant case all that has been said by the assessee is that the machine is fixed by nuts and bolts to a foundation not because the intention was to permanently attach it to the earth but because a foundation was necessary to provide a wobble free operation to the machine. An attachment of this kind without the necessary intent of making the same permanent cannot, in our opinion, constitute permanent fixing, embedding or attachment in the sense that would make the machine a part and parcel of the ear....
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....d. In view of that finding, we are unable to uphold the contention of the appellant that the machine must be treated as a part of the immovable property of the Company. Just because a plant and machinery are fixed in the earth for better functioning, it does not automatically become an immovable property." (emphasis supplied) 18. In Mallur Siddeswara Spinning Mills (P) Ltd. vs. CCE, Coimbatore [2004 (166) ELT 154 (SC)], the Supreme Court held that mere bolting of machine to a frame from which it can be unbolted and then shifted would not render the machine to be an immoveable property. The observations of the Supreme Court, in this connection, are reproduced below: "2. Briefly stated the facts are as follows:- The Appellants are in the business of spinning cotton yarn. It is claimed that in Salem there is acute power shortage. Thus two generator sets were installed in their factory one on 13th March, 1991 and the second on 15th January, 1992. Show Cause Notice dated 2nd July, 1993 was issued to them claiming duty on manufacture of generating sets. The Collector confirmed the demand for duty holding that there was deliberate suppression of the fact of manufacture of generating....
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....ture of the plants in question do not constitute annexation and hence cannot be termed as immovable property for the following reasons: (i) The plants in question are not per se immovable property. (ii) Such plants cannot be said to be "attached to the earth" within the meaning of that expression as defined in Section 3 of the Transfer of Property Act. (iii) The fixing of the plants to a foundation is meant only to give stability to the plant and keep its operation vibration free. (iv) The setting up of the plant itself is not intended to be permanent at a given place. The plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed. 38. A machine or apparatus annexed to the earth without its assimilation by fixing with nuts and bolts on a foundation to provide for stability and wobble free operation cannot be said to be one permanently attached to the earth and therefore, would not constitute an immovable property. Thus, the Tribunal erred in relying on the Bombay High Court in Bharti Airtel Ltd. (supra). It is also important to understand that when the matter was carried out in the Bombay High Court and the jud....
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.... providing output services, except those which are specifically excluded in the said Rule. Therefore, the definition is wide enough to bring all goods which are used for providing any output service. Further, from the decisions of the Supreme Court and other judgments referred to previously, the test applicable for determining whether inputs are used in the manufacture of goods is the "functional utility' test. If an item is required for providing out the output services of the service provider on a commercial scale, it satisfies the functional utility test. In the facts of the present case, what emerges is that, BTS is an integrated system and each of its components have to work in tandem with each other in order to provide the required connectivity for cellular phone users and for efficient telecommunication services. The towers and pre-fabricated shelters form an essential in the provision of telecommunication service. The CESTAT - in the opinion of this Court - failed to appreciate that it is well settled that the word "used" should be understood in a wide sense, so as to include passive as well as active use. The towers in CKD condition are used for the purpose of supplying th....
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....he primary test to qualify as an accessory is whether does the item in question adds to the beauty, convenience or effectiveness of something else. An accessory is an article or device that adds to the convenience or effectiveness of but is not essential to the main machinery. It was highlighted during the hearing of the appeals that the towers are structures installed to support GSM and microwave antennae. These antennae receive and transmit signals and are used for providing output service. Without them, the antennae cannot be installed high above the ground and cannot receive or transmit signals. Therefore, the towers too have to be considered as essential component/part of the capital goods, namely BST and antennae. Further, BTS is an integrated system and each component in the BTS, have to work in tandem to provide cellular connectivity to phone users and to provide efficient services. In the facts of the present case, it is evident that the towers form part of the active infrastructure as the antennae cannot be placed at that altitude to generate uninterrupted frequency. Further, these shelters are accessories for the placement of various BTS equipment and other items for it ....