In Re: Vindhya Telelinks Ltd.
GST
2018 (9) TMI 1646 – AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND – 2018 (17) G. S. T. L. 649 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND – AAR
Dated:- 28-8-2018
AAR No. 06/2018-19 In Application No. 01/2018-19
GST
SHRI VIPIN CHANDRA AND SHRI AMIT GUPTA MEMBER
Present for the Applicant: Shri Sanjay Gupta, Vice President
Present for the Jurisdictional Office : None
Note : Under Section 100(1) of the Uttarakhand Goods and Services Tax Act, 2017, an appeal against this ruling lies before the appellate authority for advance ruling constituted under section- 99 of the Uttarakhand Goods and Services Tax Act, 2017, within a period of 30 days from the date of service of this order.
RULING
1. This is an application under Sub-Section (1) of Section 97 of the CGST Act and the rules made thereunder filed by M/s. Vindhya Telelinks Ltd. Ground Floor, Wing-B, Commercial Plaza, Hotel Radisson, NH 8, Mahipalpur, New Delhi seeking
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ore, in terms of said Section 97(2)(d) of CGST/ SGST Act, 2017, the present application is hereby admitted.
4. Accordingly opportunity of personal hearing was earlier granted on 14.06.2018 and the applicant attended the hearing. That time the authority had Shri Anil Singh, Joint Commissioner, SGST and Shri Amit Gupta, Joint Commissioner, CGST were members. Since Shri Anil Singh, has been promoted and transferred, therefore fresh PH has been given to the applicant on 01.08.2018 and 13.08.2018 and the applicant had sought adjournments vide letters dated 28.07.2018 & 08.08.2018. Another personal hearing was fixed on 28.08.2018 and Shri Sanjay Gupta, Vice President of the applicant attended the hearing on the designated date.
5. In the present application, applicant has requested for advance ruling on admissibility of cenvat credit of goods and services used for erection of infrastructure which is discussed as under :
6.1 Admissibility of ITC of goods & services used for erection of inf
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s since the infrastructure provided by the applicant is different from “Telecommunication Tower” .
6.3 To give decision on the issues, we have to go through the background of telecommunication services how it works.
The mobile telecommunications industry provides cellular telephone services through the use of active and passive infrastructure, to use industry terminologies. The active infrastructure, as the name implies, comprises the core elements of cellular telephony in the form of a network of contiguous radio cells providing coverage through operating on a dedicated set of radio channels of defined frequencies. Elements of the active infrastructure are the base transceiver station (BTS), the base station controller (BSC), the mobile switching centre (MSC) and microwave and GSM antennae. The antenna enable both the transmission and receipt of radio signals, enabling the cellular telephony to proceed uninterrupted as the subscriber is mobile.
In contrast, the passive infrastructu
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onopole tower is a single steel or concrete tube tower. It requires one foundation and typically don't exceed 50 metres. The antennas are mounted on the exterior of the tower.
(c) Guyed Tower/Mast – (Guyed towers used to be the cheapest tower to construct, but require the greatest amount of land. For taller heights (100 metres and greater) it is much cheaper to build a guyed tower. Most radio and television towers are guyed towers. A guyed tower is a straight tower (also referred to as mast) connected by guy wires attached to the ground in all directions, which anchor and support the tower.
6.5 As per applicant, they are engaged in leasing of 'Telecommunication Fibre'. In hilly areas, the telecommunication fibres are kept to be elevated unlike in plain areas where the fibres are put underground. It is only because of this reason the fibres cannot be put underground in the hilly area, they are placed on the poles. The infrastructure so erected by them to elevate the fibre
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re placed on pole to joint the incoming end of the fibre to outgoing end of the fibre. Loop brackets are placed on the pole to hold extra fibre so that fibre can be reconnected in case there is any cut or damage in the pulling the fibre down whenever so needed.
d. Stay wires are used in some poles for protecting them from bending.
6.7 The details of items used in the infrastructure are as under:
a. The poles used in the infrastructure are hollow and does not contain any fibre inside.
b. GI Support erected is also hollow, from which fibres arc passed.
c. The height of pole is 7m while in exceptional cases it is 9m.
d. The pole along with muff installation can be removed using civil work without any damage to the entire infrastructure. After removal of the said infrastructure, it can be used easily at another location without any damage to the fibre connected to the structure or the structure as a whole.
6.8 To appreciate the law position in this regard, first we have to go t
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ating such vehicles or conveyances;
(ii) for transportation of goods;
(b) the following supply of goods or services or both:-
(i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
(ii) membership of a club, health and fitness centre;
(iii) rent-a-cab, life insurance and health insurance except where
(A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
(B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable com
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ices or both used for personal consumption;
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and
(i) any tax paid in accordance with the provisions of sections 74, 129 and 130.
17(6) The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be attributed.
Explanation. For the purposes of this Chapter and Chapter VI, the expression “plant and machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes-
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.
6.9 The explanation (supra) put restrictions on availment of cenvat credit in respect of apparatus, equipment, and machinery fixed to earth by foundation or structural support that
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tennas that transmit and receive radio-frequency (RF) signals from mobile phones and devices. Wires run from the tower antennas to base station equipment, typically located at ground level in sealed telecom equipment cabinets.
d. A cell site or cell tower is a cellular-enabled mobile device site where antennae and electronic communications equipment are placed.
e. The telecommunication towers during the course of providing output service of telecommunication affixed to the earth becomes immovable property as it cannot be moved to another place for use in the same position.
6.11 On analyzing the work being undertaken by the applicant as discussed above, we observe that:
a. The poles erected by the applicant are used for stringing of fibres
b. Height of the poles varies from 7m to 9m.
c. The poles do not contain antennas electronic communications equipment.
d. There is no cell site where antennae and electronic communications equipment are placed.
e. The infrastructure was a
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ers, the petitioner enters into agreements with private owners. Armed with such agreements, the petitioner would apply to the local authorities for permission to erect such a structure. As pointed out by the petitioner in the petition, such structure consists of the following :
“a. A pre-fabricated shelter made of insulating PUF material made of fibers.
b. Electronic Panel.
c. Base Transceiver Station(BTS) and other radio transmission and reception equipment.
d. A diesel generator set.
e. Six poles of 6 to 9 meters length each made of hollow steel galvanized pipes.”
6. To understand the purpose of such BTS's, we may refer to the booklet circulated by the Department of Telecommunications Ministry of Communications & IT, Government of India and titled as “Mobile Communication Radio Waves & Safety, in which it is stated as under :
“Cellular Phone tower & waves Mobile phone base stations are radio transmitter with antennas mounted on either transmission towers or roof tops on
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obile phone, the phone transmits radio waves to the antenna of a nearby base station. The base station then transmits the call using the mobile telecommunications network to the phone of the person you are calling.
In town and cities where there are many phone users, more base stations are needed than in rural areas. The antenna of the base stations are mounted on mast, buildings or towers. The intensity of the radio waves emitted from base stations in places where the public have access are generally found to be hundreds of times below the health and safety guidelines.
The intensity of electro-magnetic wave (power density) weakens very quickly as it moves away from the antenna. It is reduced to ¼ when the distance from the antenna double and to 1/9 when the distance is three times.”
6.13 The hon'ble Supreme Court of India in civil appeal nos.5360 -5363 of 2013 in the case of Ahmadabad Municipal Corporation versus GTL Infrastructure Ltd. & ors. = 2016 (12) TMI 1092 – SUPREM
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n Towers are in the nature of immovable property and are consists of
a. A pre-fabricated shelter made of insulating PUF material made of fibres.
b. Electronic Panel.
c. Base Transceiver Station (BTS) and other radio transmission and reception equipment.
d. A diesel generator set.
e. Six poles of 6 to 9 meters length each made of hollow steel galvanized pipes.
6.15 We observed that each of these goods had independent functions and hence, they cannot be treated and classified as single unit. It also observed that all goods are not eligible for credit and only those relatable to output services would be eligible for credit. Since the towers merely enabled the antennae to function, they did not enter the composition of the antenna themselves and could not be construed as components or parts thereof. We further observed that only telecom equipments like BTS transmitters which are used in providing telecom services alone would be liable to input credit. The towers and PFB are
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f CGST/SGST Act, 2017 which is read as under:
“goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
6.19 As discussed supra we observe that if the goods are movable from one place to another in the same position or liable to be dismantled and re-erected at the later place, if it is liable to be shifted and was dismantled or re-erected at a later place, it will be movable property. But if erected permanently with out being shifted from place to place, then it would be treated as permanently attached to the earth and the same will be treated as immovable property.
6.20 Thus we observe that “telecommunication tower” does not come within the purview of goods in as much as the same being a immovable property and the ITC on “telecommunication tower” is not admissible as per explanation to S
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