Why in news
The Supreme Court allowed telecom companies to claim Central Value Added Tax (CENVAT) credit on excise duties paid for mobile towers and pre-fabricated buildings (PFBs).
The Bombay High Court had ruled against the telecom companies, while the Delhi High Court had favored them.
The Supreme Court resolved this conflict by siding with the Delhi High Court’s view.
What SC said
The Court ruled that mobile towers and PFBs are "capital goods" or "inputs" under CENVAT rules 2004, as they support mobile signal transmission.
Telecom companies are entitled to CENVAT credit for mobile towers and PFBs as they are essential for providing mobile services.
SC agreed with the Delhi High Court’s application of the “functional utility test” to hold that mobile towers and PFBs were required by MSPs for “providing output service on a commercial scale”.
The Court dismissed the Revenue’s claim that towers and PFBs are immovable, stating they can be dismantled and moved, qualifying them as goods.
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