New Delhi: The Supreme Court on Friday upheld a Delhi High Court's December ruling that favoured Bharti Airtel and Indus Tower, holding that telecom towers qualify as "movable" property and thus eligible for input tax credit (ITC) under the income tax laws.
Reaffirming pre-GST position on mobile towers ceasing to be an 'immovable property,' a bench of Justice Pankaj Mithal and Justice Prasanna B Varale dismissed the income tax department's appeal and upheld the HC's December 12 decision that held 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.
It also upheld the HC decision to quash the demand and show cause notices issued to Bharti Airtel and Indus Towers.
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 top court refused to accept the revenue department'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.
Senior counsel Arvind P. Datar, appearing for Airtel, argued that the intent of the law, both in the pre-GST and post-GST regime, had been consistent in denying the credit to be only in the context of immovable property, whether pre-GST or post-GST.
The telcos' stand was that the telecommunication towers were moveable items of essential equipment 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.
Reaffirming pre-GST position on mobile towers ceasing to be an 'immovable property,' a bench of Justice Pankaj Mithal and Justice Prasanna B Varale dismissed the income tax department's appeal and upheld the HC's December 12 decision that held 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.
It also upheld the HC decision to quash the demand and show cause notices issued to Bharti Airtel and Indus Towers.
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 top court refused to accept the revenue department'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.
Senior counsel Arvind P. Datar, appearing for Airtel, argued that the intent of the law, both in the pre-GST and post-GST regime, had been consistent in denying the credit to be only in the context of immovable property, whether pre-GST or post-GST.
The telcos' stand was that the telecommunication towers were moveable items of essential equipment 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.
