Facts of the Case

M/S Indus Towers Limited was issued a Show Cause Notice dated 24.05.2024 in FORM GST DRC-01 by the Deputy Commissioner of Commercial Taxes, proposing to demand and recover Input Tax Credit of Rs.24,22,64,468/- (CGST Rs.7,14,68,174/-, SGST Rs.7,14,68,174/-, IGST Rs.9,93,28,150/-) along with interest and penalty for the period April 2019 to March 2020, under Section 73 of the CGST/KGST Act. The demand rested on the premise that ITC on inputs, capital goods and input services used for constructing telecommunication towers was blocked under Section 17(5)(d) of the CGST Act, since towers were treated as an 'immovable property'.

Issues Involved

  1. Whether telecommunication towers constitute 'immovable property' so as to attract the ITC block under Section 17(5)(d) of the CGST Act.
  2. Whether the specific exclusion of telecommunication towers from the definition of 'plant and machinery' in the Explanation to Section 17(5) implies that towers must be treated as immovable property.

Petitioner's Arguments

  • Telecommunication towers are movable items of equipment capable of being dismantled and relocated; only the concrete base is fixed, and that too merely for stability, not permanence.
  • The issue stood conclusively settled by the Supreme Court in Bharti Airtel Ltd v. Commissioner of Central Excise, Pune, 2024 SCC OnLine SC 3374, affirming the Delhi High Court's ruling that mobile towers are movable "capital goods"/"inputs", applying the tests of permanency, intendment, functionality and marketability under the Transfer of Property Act.
  • The Delhi High Court, in Bharti Airtel Limited, Indus Towers Limited, Elevar Digitel Infrastructure Pvt. Ltd. v. Commissioner, CGST Appeals-1 Delhi, had already quashed identical SCNs against Indus Towers on this very ground, and that ruling was upheld by the Supreme Court by dismissing the Revenue's SLP.

Respondent's Arguments

  • The Explanation to Section 17(5) specifically excludes telecommunication towers from the definition of "plant and machinery", and the respondents sought to distinguish the Bharti Airtel line of rulings on this basis, without disputing the conclusions of those decisions as such.

Court Order / Findings

  • The Court held it could not sustain the Department's argument: exclusion of telecom towers from "plant and machinery" does not mean the statute treats them as immovable property — towers must independently satisfy the tests of immovability before Section 17(5)(d) can apply at all.
  • Applying the permanency, functionality, intendment and marketability tests reaffirmed by the Supreme Court in Bharti Airtel, telecommunication towers are movable property/"goods": they can be dismantled, relocated and resold without damage, and their attachment to a foundation is only to provide stability, not permanent beneficial enjoyment of land.
  • Since the Delhi High Court's ruling quashing an identical SCN against Indus Towers itself had been confirmed by the Supreme Court (dismissing SLP(Civil) Diary No. 35416/2025), that precedent directly and squarely covered the present case.
  • The Show Cause Notice dated 24.05.2024 was accordingly quashed.

Important Clarification

  • Telecommunication towers are not "immovable property" for the purposes of Section 17(5)(d) of the CGST Act; they are movable "goods", applying the permanency, object-of-annexation, intendment, functionality and marketability tests under the Transfer of Property Act as reaffirmed in Bharti Airtel.
  • The specific exclusion of telecommunication towers from the Explanation's definition of "plant and machinery" is not, by itself, a legislative declaration that towers are immovable property — that threshold question must be independently satisfied before the Section 17(5)(d) block can be invoked at all.

Sections Involved

  • Section 17(5), CGST Act, 2017 – blocked credits, including ITC on goods/services for construction of immovable property (other than plant and machinery), with an Explanation excluding telecommunication towers from 'plant and machinery'.
  • Section 73, CGST Act, 2017 – demand and recovery mechanism used to issue the impugned SCN.

Decision – In Favour of

Decided in favour of the Assessee. The impugned Show Cause Notice proposing ITC denial was quashed in full.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: Writ Petition No. 18850 of 2024 (T-RES); NC: 2025:KHC:46678
  • Coram: Hon'ble Mr. Justice S.R. Krishna Kumar
  • Date of Order: 13 November 2025

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