The Uttarakhand Authority of Advance Rulings (AAR), while disposing an application by Vindhya Telelinks Ltd., held that Input Tax Credit (ITC) is available on ‘Telecom Equipments’ installed on Mobile Towers since they have separate function and does not constitute ‘Telecommunication Towers’ which are classified as immovable property on which ITC is not recoverable.
The issue before the AAR was the determination of availability of the Cenvat Credit of goods and services used for the erection of infrastructure to which fibre cables are connected for leasing to Telecommunication Operators. The goods and services include steel tabular pole, galvanized iron wire, nuts and bolts, optical fibre cables, plastic pipes, clamps for telecommunication service providers since the infrastructure provided by the applicant is different from “Telecommunication Tower”.
The applicant was registered as Infrastructure Provider Category – 1 wherein the scope of his activities are limited to establish and maintain assets such as dark Fibres, Right of Way, Duct Space for grant on lease/ rent/ sale basis only to licensed Telecom Service Providers.
The Authority examined the background of telecommunication services by differentiating between types of telecommunication towers. The applicant submitted that his infrastructure was different than those discussed since these towers in hilly areas required elevation infrastructure unlike in plain areas
The Authority went through the provisions governing ITC under the Central Goods and Services Act (CGST) and State Goods and Services Tax Act (SGST) where no ITC would be available in cases of supply of ‘Works Contract Services’ for construction of an immovable property. Further, ITC would also be unavailable on ‘telecommunication towers’ under Explanation to Section 17(6).
It was held by the Authority that the infrastructure provided by the Applicant is different from “Telecommunication Tower” since it does not constitute of the required components and is not immovable property since can easily be moved to another place for use without any damage to the entire infrastructure making it classifiable as ‘goods’ under the CGST/ SGST Act, 2017. Further, the Authority held that the applicant can avail Credit on GST paid on the goods and services in terms of Section 16 (1) of the CGST/SGST Act, 2017 consumed while providing the supply in question.
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