Supreme Court affirms mobile towers are not immovable property; upholds ITC eligibility under GST

Illustration of the Supreme Court building alongside a mobile telecom tower, with bold text stating 'SUPREME COURT AFFIRMS MOBILE TOWERS ARE NOT IMMOVABLE PROPERTY'.

Summary

On August 8, the Supreme Court dismissed the Revenue Department’s Special Leave Petition against a Delhi High Court ruling that classified mobile telecom towers as plant and machinery, making them eligible for input tax credit (ITC) under GST.

  • The case involved Bharti Airtel and similar telecom operators.
  • The Revenue had argued towers were immovable property, blocked from ITC under Section 17(5) of the CGST Act, 2017.
  • The Delhi High Court earlier held that towers are plant and machinery, which are excluded from blocked credit, thus ITC is allowable.
  • The Supreme Court upheld the High Court’s view, rejecting the Revenue’s attempt to draw distinctions between the service tax and GST regimes, and refused to entertain “hair-splitting” interpretations.

Impact:

This is a significant relief for the telecom sector, affirming that ITC on telecom towers cannot be denied under GST.

Background of the Dispute

  • Telecom companies like Bharti Airtel install mobile towers (often on rooftops or on land) for network services.
  • Revenue Department denied ITC, claiming towers are immovable property, citing Section 17(5) blocking credit.
  • Telecom operators argued towers are essential equipment used directly in providing taxable output services, and qualify as “plant and machinery”, not “building or civil structure”.

Delhi High Court Ruling

  • Held in favour of Bharti Airtel.
  • Reasoning:
    • Towers are integral to providing telecom services, akin to apparatus/equipment.
    • The mere fact they are fixed for operational stability doesn’t make them “immovable property” in the sense of Section 17(5).
    • Functional test over form: What matters is their use in taxable supply.

Revenue’s Appeal (SLP)

  • Revenue filed Special Leave Petition before Supreme Court.
  • Argued:
    1. Towers are affixed to earth = immovable property.
    2. GST regime should follow service tax precedent where towers were treated as immovable and credit was denied.
  • Also tried to distinguish between service tax regime and GST on “plant and machinery” definition.

Supreme Court’s Findings (August 8, 2025)

  • Dismissed SLP at admission stage (i.e., refused to even admit the case).
  • Declined to interfere with Delhi HC decision.
  • Observed:
    • No scope for “hair-splitting” interpretation between GST and service tax frameworks.
    • Once towers meet the definition of plant and machinery, ITC cannot be denied merely because they are fixed to earth.
    • The High Court’s interpretation correctly applies GST law and the definition in Section 17.