Tower and Infrastructure Providers Association (TAIPA) industry association for leading Telecommunication Infrastructure Providers such as Bharti Infratel, Indus towers, ATC towers, GTL Infrastructure, Reliance Infratel, and Tower Vision, appreciated the judgment of Hon’ble High Court of Delhi for allowing CENVAT credit on Telecom towers and parts thereof and pre-fabricated shelters, etc.
The revenue authorities disputed the availability of the input tax credit mechanism on the ground that the telecom towers and shelters were ‘immoveable’ in nature and consequently did not qualify for input tax credit, as defined under the CENVAT Credit Rules, 2004 (CCR).
However, the telecom industry contested that the telecom towers and shelters are ‘movable’ in nature. The Hon’ble High Court of Delhi passed a favorable order vide order dated 31st Oct 2018 in favor of TowerCo and strongly observed that the equipment is fastened to the civil foundation for a ‘wobble free operation’ and to provide greater stability. The tower / shelter may be unbolted and reassembled without any damage to any other location.
Further tower and pre-fabricated shelters also qualify as ‘inputs’ as well as ‘capital goods ‘as applicable, used for providing output service to telecom operators. It is pertinent to mention that Telecom Infrastructure industry makes a direct contribution of more than Rs. 5,000 crores annually in corporate income tax and service tax and invests more than Rs. 10,000 crores annually in equipment’s like towers, shelters, batteries, air-conditioners, DG sets and power management systems etc. supporting the ‘Make in India’ and Digital India vision of the Hon’ble Prime Minister.
While complimenting and supporting the judgment, Tilak Raj Dua, Director General, TAIPA, said, “We appreciate and honor the judgment of Delhi high court for allowing CENVAT credit on Telecom towers and related shelters, accessories etc. which was available before GST regime. The availability of Input tax credit (CENVAT credit) mechanism will reduce overall billing by IP-1s to TSPs. Telecommunication services are the essential services and requires huge investment for connecting the unconnected, achieving Digital India and Smart Cities and rolling out futuristic technologies such as 5G, IoT, M2M, VR and AR etc.”