Vodafone India has moved the Supreme Court seeking stay on a demand of Rs 920 million, including penalties by the excise department. The demand is on the premise that the operator can’t claim credit for the tax content on some of its telecom infrastructure in meeting the tax liability on output (telecom) service.

Vodafone has challenged the Bombay High Court’s ruling that held that the company was not entitled to credit of input duties paid on tower parts/shelter on the ground that tower/shelter is an immovable property.

Vodafone, however, is of the view that to classify the goods as immovable properties, attachment to the land has to be for the permanent beneficial enjoyment of the land and should not have a separate existence devoid of the land. According to the operator, tower is an accessory of antenna and without towers antennas cannot be installed and made functional. Hence, the tower should be treated as parts and components of the antenna.

Vodafone has also contended that antennas fall under chapter 85 of the schedule to the Central Excise Tariff Act and are considered as capital goods. So, mobile towers which are used for providing cellular services become accessories of antenna and should also be treated as capital goods for availing credit of tax paid.