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Informist, Friday, Aug. 8, 2025

 

NEW DELHI – The Supreme Court on Friday upheld a Delhi High Court's 2024 ruling that telecom towers were movable property and do not fall within the ambit of Section 17(5)(d) of the Central Goods and Services Tax Act, 2017, and therefore were eligible for input tax credit. Further, the top court upheld the high court's quashing of the tax department's demand order and show cause notices against Bharti Airtel Ltd. and Indus Towers Ltd.

 

Section 17(5)(d) states that if goods or services or both are received by a taxable person for construction of an immovable property, other than plant or machinery, on his own account then the input taxes paid with respect to such goods or services or both are not eligible for being taken as credit.

 

Bharti Airtel and Indus Towers had argued that the tax department's notices and demand order sought to deny input tax credit on inputs and input services used for setting up passive infrastructure on the ground that the same were used in the construction of telecommunication towers and consequently falling within the ambit of clause (d) of Section 17(5) of the CGST Act.

 

The telecom companies had said that telecommunication towers are moveable items of essential equipment used in telecommunications which can be dismantled at site and, thus, capable of being moved. It is only the concrete structure on which those telecommunication towers are placed which could be treated as an immovable element of that equipment whereas steel or metal structures are capable of being shifted to other locations, said the telecom companies.

The building up of those towers on a concrete base is essentially for the purpose of according stability to the towers and that in itself would not detract from their basic characteristic of being items of equipment which are principally moveable, said the telecom companies. Thus, the assumption that the installation of these towers results in the establishment of an immovable structure is misconceived, said the telecom companies.

 

The tax department had said that the explanation at the end of Section 17(5) of the CGST Act had excluded the telecommunication towers specifically from plant and machinery. On this, the high court had ruled that the specific exclusion of telecommunication towers from plant and machinery would not lead one to conclude that the statute contemplates or envisages telecommunication towers to be immovable property. "Telecommunication towers would in any event have to qualify as immovable property as a pre-condition to fall within the ambit of clause (d) of Section 17(5). Their exclusion from the expression 'plant and machinery' would not result in it being concomitantly held that they constitute articles which are immoveable," said the high court. Challenging the high court's ruling, the tax department had moved the Supreme Court.

 

At 1454 IST, the shares of Bharti Airtel were down 3.1% at INR 1,863.90 on the National Stock Exchange, and those of Indus Towers were down 0.3% at INR 333.60.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Surya Tripathi

Edited by Akul Nishant Akhoury

 

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