Supreme Court Clears Use Of Tax Credits On Infrastructure Duties »

At the heart of the issue lay the question of whether telcos can claim tax credits for duties paid on tower parts, shelters or prefabricated buildings, office chairs, and printers purchased by them against the service tax paid for providing cellular services.

In 2014, the Bombay High Court had held that credit cannot be allowed as all these items such as towers and its parts thereof, shelters, office chairs, and printers had independent functions and hence, they cannot be treated and classified as a single unit.

It said that only those goods that are directly relatable to the output service, which is providing cellular service, would be eligible for credit.

“Tower and parts thereof are fastened and are fixed to the earth and after their erection become immovable and therefore cannot be goods,” the high court said.

The court had also rejected the argument that antennas, a component through which cellular service is provided, are fastened to towers and without towers antennas cannot be installed and therefore they should be considered as a composite unit for the availment of tax credits.

It is crucial to note that certain courts have taken a different position than the Bombay High Court and have allowed the telcos to avail tax credits for towers and shelters.

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