The Supreme Court of India has upheld a Delhi high court ruling that classified telecom towers as “movable” property, making them eligible for input tax credit (ITC) under income tax laws.
A Bench dismissed the income tax department’s appeal against the high court’s December 12 decision, which held that telecom towers qualify as plant and machinery and fall outside the ambit of Section 17(5)(d) of the Central Goods and Services Tax (CGST) Act, 2017. The ruling quashed demand and show cause notices issued to Bharti Airtel and Indus Towers.
Rejecting the revenue’s argument that the GST regime should be treated differently from the service tax era, the court refused to allow “hair-splitting” interpretations. The department had contended that telecommunication towers were specifically excluded from plant and machinery in the CGST Act and should be considered immovable property.
Airtel and other telecom operators argued that towers are movable items essential for telecommunications, capable of being dismantled and relocated. Only the concrete base was immovable, they said, while the steel or metal structures could be shifted to other sites.
The high court had earlier found the denial of ITC on the grounds that towers are immovable property “wholly untenable,” holding that such an interpretation misconstrued the law. The Supreme Court’s ruling reaffirms the pre-GST position that mobile towers are not immovable property.
