Facts of the Case

The present matter involves three writ petitions filed by M/s Bharti Airtel Limited, Indus Towers Limited, and Elevar Digitel Infrastructure Pvt. Ltd. challenging proceedings initiated under the Central Goods and Services Tax Act, 2017 (CGST Act).

  • Bharti Airtel challenged:
    • Order-in-Original dated 24 March 2023
    • Appellate order dated 31 May 2024
  • Indus Towers and Elevar Digitel challenged:
    • Show Cause Notices issued under Section 74 of the CGST Act for the period 01 July 2017 to 31 March 2024

The dispute centered on denial of Input Tax Credit (ITC) on goods and services used for setting up telecom towers, treating them as immovable property under Section 17(5)(d) of the CGST Act.

Issues Involved

  1. Whether telecommunication towers qualify as immovable property under GST law?
  2. Whether ITC is barred under Section 17(5)(d) of the CGST Act on inputs used in telecom tower infrastructure?
  3. Whether exclusion of telecom towers from “plant and machinery” automatically makes them immovable property? 

Petitioner’s Arguments

  • Telecom towers are movable equipment, capable of being dismantled and relocated.
  • Only the civil foundation is immovable; towers themselves are not.
  • Installation is done for stability and functionality, not permanence.
  • The issue is no longer res integra in view of:
    • Supreme Court decision in Bharti Airtel Ltd vs Commissioner of Central Excise, Pune (2024)
    • Delhi High Court decision in Vodafone Mobile Services Ltd vs Commissioner of Service Tax (2018)
  • These judgments held:
    • Towers are movable goods
    • Eligible as capital goods/inputs
    • ITC cannot be denied

Respondent’s Arguments

  • Telecom towers fall within immovable property due to:
    • Their installation and attachment to earth
  • Reliance placed on:
    • Explanation under Section 17(5) of CGST Act
    • Specific exclusion of telecom towers from “plant and machinery”
  • Argument:
    • Since towers are excluded from plant & machinery, they must be treated as immovable property → ITC blocked 

Court Findings / Order

The Delhi High Court rejected the department’s contention and held:

1. Telecom Towers are Movable Property

  • Applying Supreme Court judgment in Bharti Airtel (2024):
    • Towers fail the tests of immovable property, including:
      • Permanency test
      • Annexation test
      • Functionality test
      • Marketability test
  • Towers:
    • Can be dismantled and relocated
    • Are not permanently attached to earth
    • Are installed only for operational efficiency

2. Section 17(5)(d) Not Applicable

  • Section 17(5)(d) applies only to:
    • construction of immovable property
  • Since telecom towers are not immovable property:
    • ITC restriction does not apply 

3. Exclusion from “Plant and Machinery” Not Decisive

  • Mere exclusion of telecom towers from definition of “plant and machinery”:
    • Does NOT automatically classify them as immovable property
  • They must independently satisfy tests of immovability — which they fail

Important Clarifications

  • Telecom towers:
    • Are movable goods, not immovable property
    • Eligible for Input Tax Credit
  • Attachment to earth:
    • Must be permanent & for beneficial enjoyment of land to qualify as immovable
  • Stability-based installation:
    • Does not change the nature of goods

Sections Involved

  • Section 16 – Eligibility for Input Tax Credit
  • Section 17(5)(d) – Blocked Credit (Immovable Property)
  • Section 74 – Tax demand for fraud/suppression cases
  • Explanation to Section 17(5) – Definition of “Plant and Machinery”

Link to download the order -  https://delhihighcourt.nic.in/app/showFileJudgment/YVA12122024CW132112024_164401.pdf

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