How to Claim Input Tax Credit on Infrastructure Assets Under GST After the Supreme Court Telecom Tower Ruling

On August 20, 2026, the Supreme Court of India (Justice Vikram Nath and Justice Prasanna B. Varale) dismissed the Revenue's review petition challenging the Delhi High Court's landmark ruling that telecom towers qualify as "plant and machinery" for the purposes of Input Tax Credit (ITC) under GST. The ruling, which quashed a tax demand of Rs 5,454.6 crore covering FY18 to FY24, has opened the door for infrastructure intensive businesses across India to reclaim substantial ITC on their capital assets.

If your business operates telecom towers, pipelines, industrial installations, or similar infrastructure assets, this ruling directly impacts your GST compliance strategy. This guide walks you through the process of claiming ITC on such assets, step by step, so you can act with confidence and avoid common pitfalls.

Understanding the Legal Framework: Section 17(5)(d) and the Plant and Machinery Carveout

Before diving into the steps, it is essential to understand the legal provisions that govern ITC eligibility for infrastructure assets under GST.

The General Block on Immovable Property

Section 17(5)(d) of the CGST Act, 2017 blocks ITC on goods or services received for the "construction of an immovable property (other than plant or machinery)." In simple terms, if you build an immovable structure, the GST paid on inputs used in that construction is generally not available as credit.

The Critical Carveout for Plant and Machinery

The phrase "other than plant or machinery" is the key carveout. The Explanation to Section 17 defines "plant and machinery" to mean apparatus, equipment, and machinery that is fixed to earth by foundation or structural support and is used for making outward supply of goods or services, or both. Crucially, it excludes land, building, or any other civil structures from this definition.

The dispute centered on whether telecom towers and similar infrastructure assets fell within the "plant and machinery" carveout (making ITC available) or whether they constituted "immovable property" or "civil structures" (blocking ITC). The Explanation to Section 17 previously excluded telecom towers and pipelines laid outside factory premises from the definition of "plant and machinery," but this provision has since been amended.

What the Supreme Court Settled

The Supreme Court upheld the Delhi High Court's finding that telecom towers are not immovable property because they are typically bolted to the ground, can be dismantled, and can be reinstalled at a different location. This characteristic means they do not demonstrate an intention of permanent annexation to earth, which is the legal test for immovability under the Transfer of Property Act, 1882, and the General Clauses Act, 1897. As "plant and machinery," telecom towers (and by extension, similar infrastructure assets) qualify for ITC under GST.

Who Benefits from This Ruling?

While the case directly involved the telecom sector (benefiting companies like Bharti Airtel and Indus Towers), the ruling's reasoning extends to any infrastructure intensive industry. Businesses that may benefit include:

• Telecom operators and tower companies (the most direct beneficiaries)

• Oil and gas companies with pipeline networks

• Power generation and distribution companies with transmission towers and switchyard equipment

• Manufacturing units with heavy machinery bolted to foundations

• Renewable energy companies with wind turbines and solar mounting structures

• Mining and construction companies with relocatable industrial installations

Step by Step Guide to Claiming ITC on Infrastructure Assets

Step 1: Classify Your Assets Correctly

The first and most important step is to determine whether your infrastructure assets qualify as "plant and machinery" under the GST framework. Based on the Supreme Court's reasoning, the key test is whether the asset demonstrates an intention of permanent annexation to earth.

Assets that are bolted, clamped, or otherwise attached to earth in a manner that allows dismantling and reinstallation are more likely to qualify as plant and machinery. Ask these questions about each asset:

• Can the asset be dismantled without destroying it or the structure it is attached to?

• Can it be reinstalled at a different location?

• Is it used for making outward supply of goods or services?

• Is the attachment to earth by way of bolts, nuts, or structural supports (as opposed to permanent embedding in concrete or soil)?

If the answers are affirmative, the asset is likely to qualify as plant and machinery, making ITC available on the GST paid during its construction or acquisition.

Step 2: Review Your Existing ITC Position

Many businesses may have previously reversed or not claimed ITC on infrastructure assets due to the pre amendment position or conservative advice from tax consultants. Now is the time to conduct a thorough review.

• Identify all infrastructure assets where ITC was blocked or reversed.

• Quantify the total ITC amount involved for each financial year.

• Check the time limits for claiming or reclaiming ITC under Section 16(4) of the CGST Act (which generally allows credit up to the due date of filing the return for September of the following financial year, or the date of filing the annual return, whichever is earlier).

• Determine whether any show cause notices or demands are pending against your ITC claims on these assets.

Step 3: Gather and Organize Documentation

Robust documentation is the backbone of any ITC claim. Given that the Revenue authorities have actively contested these claims (as evidenced by the Rs 5,454.6 crore demand in the present case), you should prepare for scrutiny. Ensure you have the following:

• Tax invoices: Valid tax invoices from suppliers containing all mandatory particulars under Rule 46 of the CGST Rules. The supplier's GSTIN, invoice number, date, HSN code, taxable value, and GST amount must all be correctly stated.

• GSTR 2B reconciliation: Ensure that the invoices on which you are claiming ITC are reflected in your GSTR 2B (auto generated ITC statement). Any mismatch will delay or block your claim.

• Asset classification records: Internal records showing the asset is classified as plant and machinery (not as a building or civil structure) in your books of account. Consistency with your accounting treatment under the Companies Act or Income Tax Act strengthens your position.

• Technical specifications: Engineering documentation showing that the asset is bolted or clamped (not permanently embedded), can be dismantled, and can be reinstalled. Photographs and installation manuals are useful evidence.

• Use in outward supply: Documentary proof that the asset is used for making taxable outward supplies. For telecom towers, this would be the provision of telecom services; for pipelines, the transportation of goods; and so on.

• Payment evidence: Proof that the supplier has been paid within 180 days of the invoice date (as required under Section 16(2) proviso). Failure to pay within this window triggers an automatic reversal of ITC with interest.

Step 4: File or Amend Your GST Returns

Depending on your situation, you may need to take one of the following approaches:

• For current period claims: Include the ITC in your GSTR 3B for the relevant month. Ensure the amount is correctly reflected in the appropriate ITC tables (Table 4A for eligible ITC).

• For previously reversed ITC: If you reversed ITC in earlier periods, you can reclaim it through Table 4(A)(5) of GSTR 3B ("All other ITC") in the current period, provided the time limit under Section 16(4) has not expired. Alternatively, if the time limit has lapsed, you may need to pursue the refund route through an application under Section 54.

• For ITC under dispute: If you have a pending show cause notice or demand order denying ITC on infrastructure assets, use the Supreme Court ruling as a ground for quashing the demand. File a reply citing the ruling or, if a demand order already exists, challenge it before the appropriate appellate authority.

Step 5: Address Pending Show Cause Notices and Demands

If your business has received show cause notices or demand orders denying ITC on infrastructure assets, the Supreme Court's dismissal of the Revenue's review petition significantly strengthens your defence. Take the following actions:

• File a detailed reply to any pending show cause notice, citing the Supreme Court order and the Delhi High Court's reasoning.

• If a demand order has already been passed, consider filing an appeal or a writ petition relying on the Supreme Court's position.

• Request a stay on recovery proceedings pending the disposal of your appeal, citing the Supreme Court ruling as strong prima facie evidence in your favour.

Common Pitfalls to Avoid

While the Supreme Court ruling is a significant positive development, businesses should be careful to avoid these common mistakes when claiming ITC on infrastructure assets.

1. Failing to Distinguish Between Plant and Civil Structure

Not every component of an infrastructure project qualifies as plant and machinery. The foundation, building, or civil structure on which the plant is mounted remains an "immovable property" for ITC purposes. You must clearly separate the cost of the plant or machinery from the cost of the civil works. Only the GST attributable to the plant and machinery component is eligible for ITC.

2. Ignoring the GSTR 2B Matching Requirement

Under the current GST framework, ITC can only be claimed if the supplier has filed their GSTR 1 and the invoice is reflected in the buyer's GSTR 2B. Even if the asset clearly qualifies as plant and machinery, a mismatch between your books and GSTR 2B will result in the credit being blocked or flagged during assessment. Reconcile with your suppliers regularly.

3. Missing the Time Limit Under Section 16(4)

ITC must be claimed within the time limit prescribed under Section 16(4) of the CGST Act. If you missed claiming ITC in earlier years due to the erstwhile restrictive interpretation, you need to evaluate whether the time limit has already expired. For expired periods, a refund application or a writ petition may be the only recourse.

4. Overlooking the 180 Day Payment Rule

Under the second proviso to Section 16(2) of the CGST Act, if you fail to pay the supplier within 180 days of the invoice date, the ITC already availed must be reversed along with applicable interest. For large infrastructure projects where payment terms often extend beyond 180 days, this is a critical compliance point. Ensure that payment schedules align with ITC timelines.

5. Inconsistent Asset Classification Across Statutes

If your company classifies an asset as a "building" or "civil structure" for income tax or accounting purposes but claims it as "plant and machinery" for GST, the inconsistency may invite scrutiny. While the legal definitions differ across statutes, maintaining consistency (or having a well documented rationale for different treatment) is advisable.

6. Claiming ITC on Exempt or Non Business Use Assets

Remember that even if the asset qualifies as plant and machinery, ITC is available only to the extent the asset is used for making taxable supplies. If part of the asset's use is for exempt supplies or non business purposes, a proportionate reversal under Section 17(1) and Section 17(2) read with Rule 42 and Rule 43 of the CGST Rules will apply.

Practical Checklist for Businesses

Use the following checklist to ensure a complete and defensible ITC claim on your infrastructure assets:

• Conduct an asset by asset review to classify each infrastructure component as plant and machinery or civil structure.

• Compile technical documentation (installation manuals, photographs, engineering reports) proving the asset can be dismantled and relocated.

• Reconcile all supplier invoices with GSTR 2B and resolve any discrepancies.

• Verify that all supplier payments have been made within 180 days of the invoice date.

• Check the time limit under Section 16(4) for each financial year and identify any expired periods requiring alternative remedies.

• If you have mixed use assets (partly for taxable, partly for exempt supplies), compute the proportionate ITC reversal under Rule 42 and Rule 43.

• Respond to any pending show cause notices citing the Supreme Court's dismissal of the review petition.

• Engage your GST advisor or legal counsel to review the claim before filing, particularly for high value assets.

Looking Ahead: Implications for GST Compliance Strategy

The Supreme Court's ruling does more than resolve a specific dispute. It establishes a clear interpretive framework for the "plant and machinery" carveout under Section 17(5)(d) that will guide future assessments and disputes. Businesses should take this opportunity to:

• Revisit their entire ITC compliance framework for capital assets.

• Update internal GST SOPs and training materials to reflect the current legal position.

• Engage proactively with auditors and tax authorities to ensure future claims are processed smoothly.

• Monitor any legislative changes or GST Council recommendations that may further clarify or modify the treatment of infrastructure assets.

Conclusion

The Supreme Court's dismissal of the Revenue's review petition on August 20, 2026, marks a decisive moment for ITC eligibility on infrastructure assets under GST. For businesses in the telecom, energy, manufacturing, and other infrastructure intensive sectors, the path to claiming ITC on plant and machinery is now clearer than ever.

However, the ruling alone does not guarantee a smooth claim. Proper asset classification, meticulous documentation, timely filing, and awareness of common pitfalls are all essential. Businesses that act promptly, with professional guidance, can unlock significant ITC savings and strengthen their GST compliance posture for the years ahead.

Disclaimer: This article is intended for informational purposes only and does not constitute legal or tax advice. Readers should consult a qualified GST practitioner or legal advisor before acting on any information contained herein. The applicability of the Supreme Court ruling to specific facts and circumstances may vary.