CESTAT Chandigarh Allows Indus Towers Appeals, Upholds CENVAT Credit On Telecom Towers, Shelters, Input Services

The Chandigarh Bench of the Customs, Excise and Service Tax Appellate Tribunal has allowed appeals filed by Indus Towers Ltd., holding that CENVAT credit on inputs, capital goods and input services relating to telecom towers and shelters is admissible

The dispute arose from multiple show cause notices issued for the financial years 2014–15 and 2015–16, alleging wrongful availment of CENVAT credit on inputs, capital goods and input services used for providing passive telecom infrastructure.

The adjudicating authority had partly confirmed demands and partly dropped them through orders dated 21.02.2018, leading to cross-appeals by both the assessee and the Department.

The Division Bench comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) noted that the core issue regarding the admissibility of credit on towers and shelters stands settled by the Supreme Court in Bharti Airtel Ltd vs. CCE, Pune (2024) wherein it was held that such structures are “goods” and not immovable property since they can be dismantled and relocated.

The Bench referred to the case of Idea Cellular Ltd vs. CST, Mumbai-IV [vide Interim Order No. 06/2024 dated 03.04.2024 in Appeal No. ST/86951/2015], where it was held that "expression “input service” has a wide latitude and therefore, the input services used for setting up and operation of telecom towers are eligible for credit, provided such services are used in the course of providing taxable output services."

In light of these findings, the Tribunal held that the denial of CENVAT credit by the Department was unsustainable and set aside the impugned orders to the extent they denied CENVAT credit and allowed the appeals filed by the assessee.

The bench held that "the Assessees are entitled to CENVAT Credit on inputs, capital goods and input services. Accordingly, the impugned OIOs, denying the CENVAT Credit on inputs, capital goods as well as input services, are not sustainable in law and therefore, we set aside the same and allow the appeals filed by the Assessees."

Consequently, the appeals filed by Indus Towers were allowed with consequential relief, while the appeals filed by the Revenue challenging the dropping of demands were dismissed, holding that towers, shelters and related inputs, capital goods and input services used for providing output telecom services are eligible for CENVAT credit under the CENVAT Credit Rules.

For Appellant: Krati Singh and Khushbu Sood, Advocates

For Respondent: Siddharth Jaiswal and  Amita Gupta, Authorized Representatives