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2021 (4) TMI 15 - AT - Service TaxRecovery of service tax - Franchise service - amount received against development compensation charges (Development Charges) - extended period of limitation - CENVAT credit on the purchase of towers during the period 2004-05, 2005-06 and 2006-07 - additional demand for liability of service tax on POP (a component of IUC charge) - HELD THAT:- It was imperative for the Department to establish that under the Project Agreement, MTNL had conferred a representational right i.e a right available with a Joint Venture Company (franchisee) to represent MTNL (franchisor). However, neither the show cause notice alleged that such a representational right was granted by MTNL to the Joint Venture Company nor any finding has been recorded by the Commissioner in the impugned order in this regard, though this issue was specifically raised by the appellant before the Commissioner. In the absence of such an essential requirement of the charging provision, service tax could not have been imposed. Project Agreement indicates that the developer has not to represent itself as MTNL, nor has its identity as a Joint Venture Company been subsumed in the identity of the appellant. In the present case, the Project Agreement executed between MTNL and the Joint Venture Company is for development of the immovable property and is no manner identified with the appellant. The appellant is popularly known as a ‘telecommunication service provider’ and not as a ‘developer of immovable property’. The essence of the Project Agreement is to grant development rights to the Joint Venture Company and there is nothing in the contract which may even remotely indicate that MTNL intends to do business through the developer - It cannot, therefore, be said that any franchise service was rendered to the appellant - Demand set aside. CENVAT Credit - HELD THAT:- It is a fact that out of the total amount of CENVAT credit of ₹ 4,99,32,736/- that has been disallowed claiming it to be for purchase of towers falling under Chapter 73. However, an amount of ₹ 4,90,91,607/- consisted of goods falling under Chapter 84 and 85 and, therefore, the appellant could avail the CENVAT credit. Even in respect of towers, the Delhi High Court in VODAFONE MOBILE SERVICES LIMITED, INDUS TOWERS LIMITED, TOWER VISION INDIA PRIVATE LIMITED, BHARTI INFRATEL LIMITED, VERSUS COMMISSIONER OF SERVICE TAX, DELHI [2018 (11) TMI 713 - DELHI HIGH COURT] observed that CENVAT credit is allowed to the telecommunication companies in respect of towers classified under chapter 73. It has been held that the said credit is available by considering the towers as capital goods and also as inputs. POP (a component of IUC charge) - HELD THAT:- The appellant very fairly stated that details were not provided by the appellant to the Commissioner - this issue is remitted to the Commissioner for a fresh decision and for this purpose the appellant may submit all the relevant documents within six weeks from today so as to enable the Commissioner to take an appropriate decision within the next three months. Appeal allowed in part and part matter on remand.
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