Mobile Towers Are Plant and Machinery and Are Eligible for ITC Claim: Supreme Court Upholds High Court’s Decision

The Supreme Court has recently ruled in favour of Bharti Airtel and other telecom companies by allowing them to claim Input Tax Credit (ITC) on the telecom towers, which was denied by the GST Department.

Telecom towers are generally set up on the land or on the rooftops. The main issue was whether it falls under the category of immovable property on which ITC cannot be claimed under Section 17(5) of the CGST Act, 2017, or falls under the category of plant and machinery, which is not included in the definition of blocked ITC.

The Delhi High Court had earlier ruled in favour of Bharti Airtel and other telecom companies, saying these towers fall under the category of plant and machinery, and are therefore eligible for input tax credit. However, the GST Department challenged this decision, saying ITC should not be allowed in such a case.

The department contended that the service tax regime and the GST framework in treating such infrastructure are different. The bench comprising Justice Pankaj Mithal and Justice Prasanna B. Varale did not agree with this and dismissed the petition of the GST department at the admission stage. The bench upheld the decision of the High Court and made it clear that it would not allow such “hair-splitting” interpretations.

The court held that if the towers fall under the definition of plant and machinery, ITC cannot be denied just because they are fixed to the earth. The decision has provided major relief to Bharti Airtel and other telecom companies, as now they can claim Credit for the telecom towers.