Goods and Services Tax – GST – By: – Pankaj Goel – Dated:- 7-3-2017 – Historically the passive infrastructure (mobile phone towers) sector has been plagued with intense litigation. The sector, though is a backbone for the telecommunication sector, has a huge capital expenditure requirements which inturn resulted into availability of huge CENVAT credit to be adjusted over a period of time. The authorities in the interest of revenue, denied the entire CENVAT credit by holding that the passive infrastructure so constructed is nothing but an immovable property and hence ineligible for credits. Though there were many counter arguments which the assessees are still pursuing the higher courts, this article examines the position in the Revised GST
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additions or alterations or repairs, to the extent of capitalization, to the said immovable property. Explanation 2.- Plant and Machinery means apparatus, equipment, machinery, pipelines, telecommunication tower fixed to earth by foundation or structural support that are used for making outward supply and includes such foundation and structural supports but excludes land, building or any other civil structures. From the plain reading it should be noted that as a general rule the credit of works contract service is not available, the exception is the works contract service for construction of plant and machinery. Furthermore, the way the term plant and machinery is defined is interesting for this discussion. This term is defined in an ambig
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eral has compared to CCR. While CCR required direct relationship with the provision of services, the RGL requires the supply to be used for the purpose of business. Accordingly, extending the argument to the definition it can be well argued that restricting the foundation and structural support only to towers will limit the purpose and hence the second interpretation should prevail. Moreover, the second interpretation is also in line with the stand adopted by the Tribunals under the CCR in relation to availability of credit on support materials. In a nut shell though the RGL, in its present form, will prove boon to the passive infrastructure industry. However, the varied interpretation may lead the revenue authorities to litigate the matter
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