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CENVAT Credit to Ease Burden on TSPs

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 judgement 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 favourable order vide order dated 31st Oct 2018 in favour 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 judgement, Mr. Tilak Raj Dua, Director General, TAIPA “We appreciate and honour the judgement 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.”

For streamlining the issue, TAIPA had made several submissions to various departments and ministries like Ministry of Finance, Revenue secretary, GST Council, Centre Board of excise custom, TRAI, Depart of Telecom and Ministry of Telecom etc.

The visionary initiative of honourable Prime Minister Narendra Modi such as Digital India, Smart Cities, E-Governance services and connecting the bottom of pyramid depends over the availability of critical telecom infrastructure to provide affordable telephony.

Telecommunication in India has emerged as a key driver of economic and social development in an increasingly knowledge intensive global scenario. The Indian telecommunication sector has undergone a revolutionary transition in the last two decades to become the World’s second largest telecommunication market with more than 1.1 billion subscribers connected through 5 lakh towers mounted with over 20 lakh BTSs. As per the government report, the mobile sector’s contribution to GDP which is presently 6.5 percent and will increase to 8.2 percent by 2020. – CT Bureau

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