Telecom Towers not considered as Immovable Property: CESTAT

Case Details: Reliance Jio Infocomm Ltd. - [2022] 138 taxmann.com 527 (Mumbai-CESTAT)

Judiciary and Counsel Details

• • Dilip Gupta, President & C.J. Mathew, Technical Member
  • Rafique Dada, Sr. Adv. Vipin Jain, Vishal Agarwal, Zuber Dada & Kartik Dedhe, Advs. for the Appellant.
  • Shambhu Nath & Dilip Shinde, AR for the Respondent.

Facts of the Case

The appellant is a telecom operator and had installed various monopoles, poles, telecom towers, etc. for rendering 4G telecommunication services. The appellant availed CENVAT credit of Central Excise duty paid on towers, doors, etc. as inputs and/or capital goods as defined in rules 2(k) and 2(a) of the CENVAT Credit Rules, 2004 during the period March 2014 to June 2017. Such ITC was utilized for the payment of service tax on the telecommunication services provided by it.

During the departmental audit, the Superintendent issued an audit report stating that the appellant had wrongly availed the Cenvat credit on telecom towers. Consequently, the appellant reversed the Cenvat credit under protest.

The appellant later applied for the refund of the credit reversed stating that the telecom towers installed by it were movable in nature since they were merely fixed with nuts and bolts on a foundation and not embedded in the earth as a result of which they could be dismantled and relocated without causing any damage, unlike the towers used for providing 2G/3G services which were embedded in the earth. The refund application was rejected both at the Assistant Commissioner and Commissioner (Appeals) level on the basis of the Bombay High Court judgment in the case of Bharti Airtel where it was held that the tower ‘embedded in the earth’ was regarded as immovable property.

CESTAT Held

When the matter reached the Tribunal level, the Mumbai CESTAT held that the telecom towers installed by the applicant are not immovable in nature considering that the present telecom towers are architecturally different from the traditional telecom towers as no part of these towers is embedded in the earth. It was also observed that the fastening with nuts and bolts is not permanent, since the towers can be easily unfastened and moved from one location to another without any damage. The Tribunal relied on the Apex Court Judgment in the case of Solid and Correct Engineering Works [2010 (252) ELT 481 (SC)].

The Hon’ble Tribunal also held that the appellant would be entitled to the refund of Cenvat credit which was reversed by it ‘under protest’.

List of Cases Reviewed

• • CCE v. Solid & Correct Engg. Works, 2010 (252) E.L.T. 481 (SC) (paras 26, 35 and 38)
  • Vodafone Mobile Services Ltd. v. CST [2018] 100 taxmann.com 245 (Delhi) (paras 37 and 40)
  • Usha International v. Commissioner of Customs 2017 (357) E.L.T. 532 (para 55)
  • Century Metal Recycling (P.) Ltd. v. Union of India, 2009 (234) E.L.T. 234 (Punj. & Har.) (para 55) followed.
  • Bharti Airtel Ltd. v. CCE [2014] 51 taxmann.com 254/48 GST 431 (Bom.) (paras 31, 33, 36, 37 and 38)
  • Vodafone India Ltd. v. CCE [2015] 61 taxmann.com 327/52 GST 1146 (Bom.) (paras 34, 37 and 38)
  • Primacy Industries Ltd. v. Union of India 2020 (374) E.L.T. (578) (Kar.) (para 57)
  • Gyan Enterprises v. Coal India Ltd., 2017 (347) E.L.T. 65 (Jhar.) (para 58) distinguished.

List of Cases Referred to

• • Bharti Airtel Ltd. v. CCE [2014] 51 taxmann.com 254/48 GST 431 (Bom.) (para 8)
  • Vodafone India Ltd. v. CCE [2015] 61 taxmann.com 327/52 GST 1146 (Bom.) (para 8)
  • CCE v. Solid & Correct Engg. Works 2010 (252) ELT 481 (SC) (para 11)
  • Mallur Siddeswara Spg. Mills (P.) Ltd. v. CCE 2004 taxmann.com 1288 (SC) (para 11)
  • I.G.E. (India) Ltd. v. Collector of Central Excise 1990 taxmann.com 492 (CEGAT – New Delhi) (SB) (para 11)
  • Vodafone Mobile Services Ltd. v. CST [2018] 100 taxmann.com 245 (Delhi) (para 12)
  • Gyan Enterprises v. Coal India Ltd., 2017 (347) ELT 65 (Jhar.) (para 16)
  • Primacy Industries Ltd. v. Union of India 2020 (374) ELT 578 (Kar.) (para 16)
  • Wipro Ltd. v. CCE 2018 (363) ELT 111 (Trbi. – LB) (para 16), Triveni Engg. & Industries Ltd. v. CCE 2000 (120) ELT 273 (SC) (para 27)
  • Sirpur Paper Mills Ltd. v. Collector of Central Excise 1997 taxmann.com 265 (SC) (para 28)
  • CCE v. Hutchison Max Telecom (P.) Ltd. 2008 (224) ELT 191 (Bom.) (para 31)
  • State of Andhra Pradesh v. BSNL [2011] 33 STT 553 (AP) (para 31)
  • Usha International v. Commissioner of Customs 2017 (357) ELT 532 (Mum. – Trib.) (para 55)
  • Century Metal Recycling (P.) Ltd. v. Union of India, 2009 (234) ELT 234 (Puuj. & Har. (para 55).