2015 (6) TMI 1143 - AT - Service Tax

CENVAT credit - inputs/capital goods - telecom towers/erection of towers - case of appellant is that the disputed service falls under definition of input service - Held that - It is an admitted fact on record that the appellant is a service tax assessee duly registered under the Service Tax statute for providing the telecom services. Installation of telecom towers are for the purpose of providing the output service by the appellant - Since the disputed services have been used by the appellant for erection of the telecom towers which is used for providing the taxable output service it will not be appropriate to deny the Cenvat benefit - appeal allowed - decided in favor of appellant.

Summary

Issues: Denial of Cenvat credit on services used for erection of towers; Interpretation of 'input service' under Cenvat Credit Rules, 2004

Denial of Cenvat Credit on Services Used for Erection of Towers:
The appeal challenges the order denying Cenvat credit on services used for erecting telecom towers. The authorities contended that the services are neither capital goods nor inputs for the appellant. However, the appellant argued that the disputed services fall under the definition of input service. The appellant, a service tax assessee providing telecom services, asserted that the Cenvat credit availed is in compliance with the Cenvat statute. The Tribunal noted that the appellant is registered under the Service Tax statute and installs telecom towers to facilitate its output services. While the disputed services do not strictly align with the definition of 'input service' as per the Cenvat Credit Rules, 2004, the Tribunal emphasized that the services were utilized for erecting towers essential for providing taxable output services. Consequently, the Tribunal deemed it unjust to withhold the Cenvat benefit, ruling in favor of the appellant and setting aside the impugned order.

Interpretation of 'Input Service' under Cenvat Credit Rules, 2004:
The crux of the matter lies in interpreting the term 'input service' as defined in Rule 2(1) of the Cenvat Credit Rules, 2004. The Tribunal acknowledged that the disputed services, while not fitting the precise definition of 'input service,' were instrumental in the erection of telecom towers crucial for delivering taxable output services. This interpretation led the Tribunal to conclude that denying Cenvat credit on such services would be inappropriate, given their direct contribution to the appellant's service provision. By emphasizing the nexus between the services utilized for tower erection and the ultimate output services rendered by the appellant, the Tribunal underscored the importance of a pragmatic approach in applying Cenvat credit provisions. As a result, the Tribunal overturned the denial of Cenvat credit, underscoring the significance of considering the practical implications and operational necessities in determining the eligibility for Cenvat benefits.