The Delhi High Court has held that telecommunication towers would not fall within the ambit of Section 17(5)(d) of the CGST Act and thus denial of input tax credit is consequently not sustainable. Several petitioners were represented by Lakshmikumaran & Sridharan Attorneys here.
Relying upon the Supreme Court’s decisions in Vodafone Mobile Services as well as the recent decision in Bharti Airtel, the Court the case titled Bharti Airtel Limited v. Commissioner noted that though the decisions were rendered in the context of the Cenvat Credit Rules, 2004, the decisions, on application of the generic principles which would apply to the concept of immovable property, have in explicit terms concluded that telecommunication towers are to be treated as movable.
The High Court in this regard noted that the Supreme Court in its Bharti Airtel decision had held that telecommunication towers would not qualify the five fundamental precepts which define an immoveable property.
Department’s reliance on the Explanation appended to Section 17, which provided for specific exclusion of telecommunication towers, was rejected by the Court while it was of the view that telecommunication towers would in any event have to qualify as immovable property as a pre-condition to fall within the ambit of clause (d) of Section 17(5).
According to the Court, the specific exclusion of telecommunication towers from the scope of the phrase ‘plant and machinery’ would not lead one to conclude that the statute contemplates or envisages telecommunication towers to be immovable property.