Service tax dept slaps Rs 150 cr tax order on GTL Infra

It is taxing times for tower infrastructure companies and among the first ones facing the heat is GTL Infra. Service tax department has passed a tax order of around Rs 150 crore on GTL Infra, a telecom infrastructure company, reports CNBC-TV18's Aastha Maheshwari.

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In the order, the central board of excise and customs (CEBC) says that tower companies cannot avail cenvat credit on goods and services used in construction of tower. The duties which are paid on parts of tower are ineligible under input tax credit under cenvat. Cenvat credit is a scheme where manufacturers are allowed to set off taxes paid on input while providing output services.
According to the department, no credit can be taken incase these immovable properties are concerned. This was inline with a similar order passed against Bharti Infratel in 2012.
While GTL Infra in their official response told CNBC-TV18 that they have no service tax liability, the channel learns from department sources that tax orders to the tune of Rs 400 crore is likely to be passed on some other telecom, infra companies like Reliance Infratel and Quippo-WTTIL may get similar notices.
By way of background, 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
In contrast, the passive infrastructure comprises the elements that enable the active infrastructure to operate as described above. The telecom towers are used for hoisting the antennae to predetermined and technically viable heights for optimum coverage of the cellular network.
The towers are typically erected at the site and also comprise poles for mounting the antennae, shelters and housing for electrical and telecom equipment. It must be kept in mind that the passive infrastructure is increasingly owned and operated by standalone companies providing such infrastructure to telecom operators for a consideration