Mobile/ telecommunication towers are movable properties, eligible for taking input tax credit under the Central Goods and Services Tax Act, 2017, the Delhi High Court ruled.
A division bench of Justices Yashwant Varma and Girish Kathpalia carried that the telecom towers do not come under Section 17(5) of the CGST Act which sets out distinct goods and services which are not accountable to get regarded to avail input tax credit.
Section 17(5) contains goods and services received by a taxable person for the construction of an immovable property. Therefore, the determination of whether telecom towers are movable or immovable property was appropriate.
The bench was acknowledging three petitions, out of which telecom service provider Bharti Airtel was the one to move.
The applicant was dissatisfied with the characterization of telecom towers as immovable property by the GST Department.
It was claimed that the telecom towers are moveable items of crucial equipment used in telecommunications that could be dismantled at the site and therefore have the capability of being moved. It claimed that they were obligated to be regarded as capital goods, qualified to be viewed as inputs under Rule 2(k) of the Cenvat Credit Rules 2004.
The HC agreed and mentioned Vodafone Mobile Services Limited vs. Commissioner of Service Tax, Delhi (2018) whereby the Delhi HC had discovered that the same would be wrong to categorize mobile towers as immovable property as they would not satisfy the ‘test of permanency’ or be obligated to be viewed as something ‘attached to the earth’.
The Supreme Court in Bharti Airtel Ltd vs. Commissioner of Central Excise, Pune (2024), conclusively carried that telecommunication towers cannot be construed as being immovable property.
It applied tests of permanency, intendment, functionality and marketability and carried that telecom towers are movable. The reason shall be,
“The tower, after being assembled and fixed to the earth or a building can be dismantled without any change in the nature of the tower, and the tower can be removed and shifted to any other location as per the needs and requirements of the service provider and also can be re-sold in the market in the same form”
The Respondents have laid on Section 17(5)(d) of the Act which does not include “plant or machinery” from immovable property. It directed that the plant or machinery are not immovable property. However, the elaboration in section 17(5) does not include telecom towers from the ambit of plant and machinery.
Therefore the contention of the respondent that particular exclusion of telecom towers from the scope of the phrase plant and machinery shall directed to the conclusion that the law reflects or envisages telecommunication towers to be immovable property.
Though the HC, for the same contention to hold water the telecom towers will be required to be entitled as immovable property to fall under section 17(5)(d).
Read Also: Summary of Section 16 of GST Act with Eligibility Criteria
As the Apex court ruled that the telecom towers are movable properties therefore the HC concluded, “Their exclusion from the expression “plant and machinery” would not result in it being concomitantly held that they constitute articles which are immoveable.”
V. Lakshmikumaran along with Mr Yogendra Aldak, Mr Agrim Arora, and Mr Sumit Khadaria, Advocates from Lakshmikumaran and Sridharan Attorneys who represented three out of two applicants led the case.
| Case Title | M/s Bharti Airtel Limited Vs. Commissioner, CGST Appeals-1 Delhi |
| Citation | W.P.(C) 13211/2024 |
| Date | 12.12.2024 |
| For the Petitioner: | Mr. Sujit Ghosh, Mr. Kumar Visalaksh, Mr. Udit Jain and Ms. Akansha Dikshit |
| For Respondents | Mr. Anurag Ojha, Mr. Subham Kumar, Mr. Dipak Raj and Mr. Kumar Abhishek |
| Delhi High Court | Read Order |
