In August 2025, the Supreme Court (SC) confirmed a judgment by the Delhi High Court (HC) with significant implications for infrastructure in general, and telecom in particular. A two-member bench comprising Justice Pankaj Mithal and Justice Prasanna B. Varale dismissed a special leave petition filed by the revenue department, challenging a Delhi HC input tax credit (ITC) ruling under the goods and services tax (GST) regime in favour of Bharti Airtel.
The crux of the argument is as follows: According to the revenue department, towers should qualify as immovable property, upon which ITC cannot be claimed under the relevant Section 17(5) of the CGST Act, 2017. But operators such as Airtel contend that towers qualify as plant and machinery, which is specifically excluded from the definition of blocked credit.
Operators spend hundreds of billions on tower roll-outs. Allowing ITCs will significantly reduce the tax burden for a sector weighed down by massive capital expenditure. The Delhi HC judgment was backed by a careful consideration of the operational dynamics. Towers are manufactured off-site and assembled on-site, and they may be dismantled and relocated.
The Delhi HC applied the tests of “annexation, intent, functionality, permanency and marketability”, and ruled that towers are essential equipment which fall under the category of “plant and machinery”, where ITC may be claimed. This interpretation makes sense in both physical and engineering terms.
The SC held that mobile telecom towers were “plant and machinery”, allowing companies to claim ITC on towers under the GST regime. The apex court also refused to accept the revenue department’s attempt to distinguish between the service tax regime and the GST framework in the way such infrastructure is treated, stating that it would not permit “hair-splitting” interpretations.
Towers are essential for the functioning of antennas, which transmit and receive radio signals and are thus an integral element of the provision of mobile services. Their role in signal transmission establishes a direct nexus with the service provided to users. Moreover, these structures are not permanent and can be dismantled and reassembled.
Since towers can indeed be relocated without any damage, they are not immovable. They are also clearly essential equipment and in that sense qualify as plant machinery. Airtel had also argued at the Delhi HC that the issue had already been settled by the SC in the context of the applicability of service tax in Bharti Airtel’s case.
Tax experts and telecom industry stakeholders have welcomed the verdict, noting that it brings long-needed clarity and removes a lot of ambiguity around the treatment of telecom infrastructure. It certainly improves the ease of doing business for telecom. The revenue department may, however, see it from the viewpoint of being forced to forgo large tax revenues, and an appeal may be made to a larger SC bench.
It sets an important precedent. The logic cited by the Delhi HC and affirmed by the SC may apply in other cases when it comes to GST treatment of infrastructure. This interpretation may encourage other claims for ITC on other assets, citing the logic of the Delhi HC verdict. Obviously if such claims arise, courts will have to deal with them on a case-by-case basis.
Going beyond the “hair-splitting“ interpretation of the law, policymakers should look at the broader picture. Yes, ITC allowed on telecom towers (and potentially on other infrastructure assets) could mean forgoing tax revenues in the short term. But the resulting ease of doing business, and the positive externalities of telecom and other infrastructure sectors, will result in swifter economic growth, which will result in far more revenues in the long term.
