Whether credit is admissible on service tax paid on construction of towers for providing telecommunication service ?

PJ/Case law/2013-14/1903

Case:-HUTCHISON ESSAR SOUTH LTD. VERSUS COMMISSIONER OF C.EX., CHANDIGARH

Citation:-2013(31) S.T.R. 606 (Tri.-Del.)

Brief Facts:-A part of service tax stands confirmed against the applicant/appellant by denying the benefit of modvat credit of service tax paid on construction service obtained for construction of towers and shelters etc. The said credit stands denied on the ground that output service being provided by the appellant i.e. telecommunication service can be provided even without the said towers.

Appellant Contentions:-Appellant submitted that construction of premises by the provider of output services stands specifically included in the definition of input service and the towers are essential factors to provide adjudication service. Hence, denial of credit is not justifiable.

Service utilized for procurement of input is covered by input services definition. Hence, Service tax of Rs. 12.92 lakhs approximately stands confirmed by denying the benefit of credit of service tax in respect of C & F service availed by the assessee for importing various components of the towers are also not justifiable.

Respondent Contentions:-Respondent submitted that modvat credit of service tax paid on construction service obtained for construction of towers and shelters etc. The said credit stands denied on the ground that output service being provided by the appellant i.e. telecommunication service can be provided even without the said towers.

Another amount of service tax of Rs. 12.92 lakhs approximately stands confirmed by denying the benefit of credit of service tax in respect of C & F service availed by the assessee for importing various components of the towers.

Reasoning of Judgment:-We have considered the submission from both sides and perused the record, we find in another case of the appellant, the original adjudicating authority i.e. Commissioner of Central Excise, Chandigarh vide his Order No. 81/STC/CHD-I/2010 dated 18-6-2010 has allowed the credit in respect of said disputed issue. As such, at this prima facie stage, we are of the view that the appellant is entitled to credit.

Another amount of service tax of Rs. 12.92 lakhs approximately stands confirmed by denying the benefit of credit of service tax in respect of C & F service availed by the assessee for importing various components of the towers. The adjudicating authority has denied the credit on the ground that the said services cannot be held to C & F service. However, he has nowhere stated that the manpower supply service and C & F service under which category the same stands admittedly availed by the appellants for procuring inputs. The service tax on the same has been paid by the service provider and as such they are entitled to avail credit. We prima facie agree with the submissions of the learned Advocate. By whatever name the service is called, the fact that the same stands utilized by the appellant for procuring the inputs, in which case the same would be covered by the definition of input service. Admittedly the service tax stands paid by on the services, the appellants are entitled to avail credit on the same. On this ground also, the appellants have been able to make out a good case in their favour so as to allow the stay petition unconditionally. We order accordingly.

Decision:-Petition allowed.

Comment:- The gist of this case is that in case of telecommunication services, construction of towers is essential for providing the telecommunication service and so the credit is primarily admissible on it. Moreover, the view is also supported by decision given in case of other appellant providing similar services. Further, as regards credit on other services is concerned, the same is admissible if it is used in providing output service and service tax has been paid on it.

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PJ/Case law/2013-14/1903

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