SC rejects GST department review plea, telecom firms get relief on tower tax credit

In a big relief to telecom companies, including Bharti Airtel, the Supreme Court Wednesday rejected the Central Goods and Services Tax Department's petition seeking review of its last year's decision which held that telecom towers qualify as "movable" property and, thus eligible for input tax credit (ITC) under the income tax laws.

A bench of Justice Vikram Nath and Justice Prasanna B. Varale while dismissing the department's review petition said: "We have carefully considered the review petitions as well as the grounds set out therein...Having examined the impugned order in light of the grounds raised, we are of the considered opinion that there is no error apparent on the face of the record, in the order impugned, that would justify its reconsideration. Consequently, we find no merit in the review petitions. The review petitions shall stand dismissed accordingly."

This is a welcome relief for the sector and other industries that invest heavily in fixed infrastructure, reinforcing the principle that legitimate business inputs should not be blocked from credit, legal experts told ET.


The Supreme Court had on August 8 last year upheld a Delhi High Court’s December 12, 2024 ruling that favoured Bharti Airtel and Indus Tower, holding that telecom towers fall within the scope of plant and machinery 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 ITC. The apex court had also upheld the quashing of the department's demand and show-cause notices issued to Bharti Airtel and Indus Towers.

Reaffirming pre-GST position on mobile towers ceasing to be an ‘immovable property,’ the Bench comprising Justice Pankaj Mithal and Justice Prasanna B Varale had last year refused to accept the Revenue’s stand to differentiate between the service tax regime and the GST framework in the treatment of such infrastructure, stating that it would not permit such “hair-splitting” interpretations.

The department had challenged the HC ruling that refused to characterise mobile towers as immovable property, thereby granting ITC on inputs and input services used for setting up such passive infrastructure. It stated that the explanation at the end of Section 17(5) of the CGST Act had excluded the telecommunication towers specifically from plant and machinery.

The telecos stand was that the telecommunication towers were 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 were placed which could be treated as an immovable element of that equipment whereas steel or metal structures were capable of being shifted to other locations, they said, adding that the assumption that the installation of these towers results in the establishment of an immovable structure is misconceived, said the telecom companies.

The HC had held that the denial of input tax credit based on the department’s stand that towers should be categorised as "immovable" property was "wholly untenable." It 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," the HC had said.