The Hon’ble Supreme Court of India in the case of Commissioner, CGST Appeal-1, Delhi & Ors. v. M/S Bharti Airtel Limited & Ors. [Special Leave Petition (Civil) Diary No. 35416/2025, order dated August 8, 2025] held by dismissing the Revenue’s SLP that telecommunication towers are movable property and not immovable, thereby affirming the Delhi High Court’s decision that input tax credit on such towers cannot be denied under Section 17(5) of the CGST Act. The Supreme Court refused to interfere with the High Court’s judgment, effectively upholding that telecom towers qualify as plant and machinery eligible for ITC.
Facts:
M/S Bharti Airtel Limited and other telecommunication companies (“the Petitioners”) are engaged in providing telecommunication services and installing mobile towers and related infrastructure. The Petitioners availed input tax credit on goods and services used for construction and installation of telecommunication towers.
Commissioner, CGST Appeal-1, Delhi and other GST authorities (“the Respondents”) denied input tax credit on components related to telecommunication towers by classifying them as immovable property under Section 17(5)(d) of the CGST Act, 2017, thereby restricting ITC eligibility.
The Petitioners contended that telecommunication towers are movable goods manufactured off-site, assembled on-site, and can be dismantled and relocated without damage. They argued that towers are essential equipment for providing taxable telecommunication services and qualify as capital goods eligible for ITC, with their fixation being merely for operational stability and not permanent attachment.
The Respondents contended that telecommunication towers constitute immovable property as they are fixed to earth or buildings, and the specific exclusion of telecom towers from the definition of ‘plant and machinery’ in the CGST Act supports denial of ITC under Section 17(5)(d).
Aggrieved by the Delhi High Court’s judgment in favour of the Petitioners, the Respondents approached the Supreme Court through Special Leave Petition challenging the High Court’s ruling that allowed ITC on telecommunication towers.
Issue:
Whether telecommunication towers constitute immovable property under GST law such that input tax credit is rightly denied under Section 17(5) of the CGST Act, or whether they qualify as movable capital goods eligible for ITC?
Held:
The Hon’ble Supreme Court in Special Leave Petition (Civil) Diary No. 35416/2025, order dated August 8, 2025 held as under:
- Observed that, the delay of 105 days in filing the SLP was condoned considering the facts and circumstances of the case.
- Noted that, after hearing learned counsel for both parties, the Court was not satisfied that these were fit cases to exercise discretionary jurisdiction under Article 136 of the Constitution of India.
- Held that, the Delhi High Court’s comprehensive analysis establishing telecommunication towers as movable property was sound, having applied established legal tests including permanency, intendment, functionality, and marketability from Supreme Court precedents in Bharti Airtel Ltd. v. Commissioner of Central Excise [2024 SCC OnLine SC 3374].
- Held that, the High Court correctly determined that towers are brought in CKD/SKD form, assembled on-site, can be dismantled without structural damage, and their fixation serves operational stability rather than permanent beneficial enjoyment of land, thus qualifying them as movable goods.
- Noted that, Towers and pre-fabricated buildings (PFBs), though excluded from the definition of “plant and machinery”, do not constitute as immovable property because they retain the character of “goods.” They are essential for the functioning of antennas, which actually transmit and receive radio signals, thereby forming an integral part of mobile telecommunication services. Despite not being electrical equipment themselves, their role in enabling signal transmission establishes a direct nexus with the output service. Since these structures are not permanently embedded and can be dismantled and reassembled without losing their identity, they are movable in nature.
- Held that, the exclusion of telecommunication towers from ‘plant and machinery’ definition does not automatically render them immovable property, as they must independently satisfy immovability tests under property law principles and henceforth dismissed the SLP, thereby upholding the Delhi High Court’s judgment allowing ITC on telecommunication towers and related infrastructure.
Our Comments:
The Supreme Court’s dismissal affirms the Delhi High Court’s comprehensive analysis based on established precedent from Bharti Airtel Ltd. v. Commissioner of Central Excise [2024 SCC OnLine SC 3374], where the Court had extensively examined the nature of telecommunication towers under excise law. The High Court had relied on six key tests for determining movability which are, the nature of annexation, object of annexation, intendment of parties, functionality test, permanency test, and marketability test. As towers satisfy movability criteria by being manufactured off-site, assembled with nuts and bolts, capable of dismantling and relocation without damage, and fixed only for operational efficiency rather than permanent land improvement. The Delhi High Court’s application of these principles to GST law shows judicial harmony in property classification across different tax statutes.
The Court’s analysis of Section 17(5) CGST Act is particularly significant. The provision blocks ITC on goods/services for “construction of immovable property (other than plant or machinery)” with an explanation specifically excluding “telecommunication towers” from plant and machinery definition. The High Court correctly concluded that this exclusion does not automatically classify towers as immovable property – they must independently satisfy immovability tests.
Similarly in the case of Vodafone Mobile Services Limited v. Commissioner of Service Tax, Delhi [2018 SCC OnLine Del 12302] the Delhi High Court had earlier held telecommunication towers as movable property under service tax regime, applying permanency and attachment tests.
In contrast, the Bombay High Court’s contrary approach in Bharti Airtel Ltd. v. Commissioner of Central Excise, Pune [Central Excise Appeal Nos.73 & 119 of 2012, judgment dated August 26, 2014] is now explicitly overruled. The Court clarifies that neither subsequent assembly nor use as part of an integrated telecom system detracts from the goods’ character for credit purposes. The Supreme Court also discussed and harmonized its earlier judgment in Solid and Correct Engineering Works [(2010) 5 SCC 122] strengthening the law relating to credits in the telecom sector and brings clarity for revenue and taxpayers alike.
Relevant Provision:
Section 17(5)(d) of the CGST Act, 2017:
“(5) Notwithstanding anything contained in sub-section (1) of Section 16 and sub-section (1) of Section 18, input tax credit shall not be available in respect of the following, namely:—
(d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business.
….
Explanation.- For the purposes of this Chapter and Chapter VI, the expression “plant and machinery” means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes-
(i) land, building or any other civil structures;
(ii) telecommunication towers; and
(iii) pipelines laid outside the factory premises.”
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