Supreme Court Dismisses GST Review Plea and Upholds Input Tax Credit on Telecom Towers as Plant and Machinery

Introduction

In a decisive ruling that brings finality to one of the most contentious disputes in the Goods and Services Tax (GST) regime, the Supreme Court of India has dismissed the Centre's review petitions challenging the eligibility of telecom companies to claim Input Tax Credit (ITC) on mobile telecommunication towers. The order, delivered on August 19, 2026, by the Bench of Justices Vikram Nath and Prasanna B. Varale, reaffirms the position that telecom towers qualify as plant and machinery, and are therefore not subject to the ITC restrictions applicable to immovable property under Section 17(5)(d) of the Central Goods and Services Tax (CGST) Act, 2017.

The case, cited as Commissioner, CGST Appeal-I, Delhi vs. Bharti Airtel Ltd. and Ors. (2026 Taxo.online 2494), carries major implications for Bharti Airtel, Indus Towers, Elevar Digitel Infrastructure Pvt Ltd, and the broader Indian telecom industry. The Supreme Court found no apparent error in its earlier order warranting reconsideration, thereby closing the door on the Revenue's attempts to deny ITC on telecom tower infrastructure.

Background: The ITC Dispute Over Telecom Towers

Telecom companies in India invest heavily in erecting mobile telecommunication towers to support network coverage and connectivity. Under the GST framework, businesses are generally entitled to claim ITC on goods and services used in the course of business, subject to certain restrictions under Section 17(5) of the CGST Act.

The central question was whether mobile telecom towers should be classified as immovable property (blocking ITC claims) or as plant and machinery (preserving ITC eligibility). The Revenue consistently maintained that telecom towers, once erected, become permanently affixed to the earth and are therefore immovable property. The telecom companies argued that these towers are manufactured off-site, assembled at the location, and can be dismantled and relocated without destroying their utility, making them movable in nature.

The Legal Framework: Section 17(5)(d) of the CGST Act

Section 17(5)(d) of the CGST Act imposes a restriction on ITC claims. It provides that ITC shall not be available in respect of goods or services received by a taxable person for the construction of immovable property (whether on his own account or for any other person, including when such goods or services are used in the course or furtherance of business).

Crucially, Section 17(5)(d) contains an important exception: the ITC restriction does not apply to plant and machinery. The Explanation to Section 17 defines "plant and machinery" as apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both, and includes such foundation and structural supports. However, the Explanation explicitly excludes land, building, or any other civil structures from this definition.

The Revenue contended that since telecom towers are not expressly included in the definition and are permanently attached to land, they should be treated as immovable property, thereby attracting the ITC restriction. The telecom companies countered that the exclusion from the definition of plant and machinery did not automatically render telecom towers immovable property, and that the nature of the asset must be determined on its own merits.

The Delhi High Court Ruling

The Delhi High Court delivered a landmark ruling on this matter, finding squarely in favour of the telecom companies. The High Court held that mobile telecommunication towers are movable assets and do not qualify as immovable property for the purposes of Section 17(5)(d) of the CGST Act. Consequently, the denial of ITC on these towers was set aside.

The High Court relied on several key factors to arrive at its conclusion:

• Manufacturing and Assembly Process: Telecom towers are manufactured off-site in factories and subsequently assembled at the installation location. This mode of production and deployment is characteristic of movable goods, not immovable structures.

• Dismantling Without Structural Damage: The towers can be dismantled and relocated to a different site without causing structural damage to the tower or to the land on which it stands. The ability to relocate without destruction of utility is a hallmark of movable property.

• Purpose of Fixation: The towers are fixed to the ground solely for operational stability and safety, not because they are intended to be a permanent accession to the land. Their attachment to the earth is functional, not proprietary.

• No Permanent Embedding: The towers are not permanently embedded in the earth in the manner of buildings or civil structures. They rest on foundations and structural supports that facilitate their function but do not merge the tower with the land.

The Delhi High Court effectively distinguished between assets attached to land for permanence (such as buildings) and those attached for operational functionality (such as telecom towers). This distinction proved pivotal in subsequent proceedings before the Supreme Court.

The Supreme Court's Earlier Dismissal (August 2025)

Aggrieved by the Delhi High Court's decision, the Commissioner, CGST Appeal-I, Delhi filed Special Leave Petitions (SLPs) before the Supreme Court. On August 8, 2025, the Supreme Court dismissed the Revenue's SLPs, thereby upholding the High Court's position that telecom towers are movable assets eligible for ITC under the GST framework.

The dismissal of the SLPs effectively endorsed the High Court's reasoning and brought finality at the highest judicial level. However, the Revenue was not prepared to accept this outcome and proceeded to file review petitions.

The Review Petition and Its Grounds

The Commissioner, CGST Appeal-I, Delhi filed review petitions before the Supreme Court, urging reconsideration of its August 2025 order. The Revenue advanced several arguments in support:

• Permanent Affixation: The Revenue contended that telecom towers are permanently affixed to land through foundations and cannot be relocated without dismantling the entire structure. This permanent attachment, the Revenue argued, renders them immovable property.

• Part of Real Property: The department argued that once towers are erected and bolted to foundations, they become part of the real property and cannot be severed from it without substantial effort and expense.

• Relocation Requires Dismantling: The Revenue emphasized that towers cannot be simply moved from one location to another. They must be dismantled, transported, and then reassembled at the new site, which, in the Revenue's view, is inconsistent with the character of movable property.

• Exclusion from Plant and Machinery Definition: The Revenue pointed to the Explanation to Section 17(5), which defines "plant and machinery" in specific terms, and argued that the exclusion of telecom towers from this definition should be treated as a legislative intent to deny ITC on such assets.

Supreme Court's Reasoning in Dismissing the Review

On August 19, 2026, the Supreme Court Bench of Justices Vikram Nath and Prasanna B. Varale dismissed the Revenue's review petitions, finding no apparent error in the earlier order that would warrant reconsideration. The Court declined to entertain what it described as "hair-splitting" interpretations advanced by the Revenue.

The Supreme Court's dismissal of the review petitions rested on the following principles:

• The nature of telecom towers as movable property was well-established by the factual findings of the Delhi High Court. The towers are manufactured in factories, transported to sites, assembled using bolts and structural supports, and can be dismantled and reassembled elsewhere without destroying their utility.

• The exclusion of telecom towers from the statutory definition of "plant and machinery" under the Explanation to Section 17(5) does not, by itself, convert them into immovable property. The classification must be determined based on intrinsic characteristics and the nature of attachment to the earth, not merely by inclusion or exclusion from a particular statutory definition.

• The fixation of towers to the ground is for operational stability and safety purposes. This functional attachment does not transform the towers into immovable property. The intent is not to make the tower a permanent part of the land but to ensure it remains upright and stable during operation.

• The Revenue's interpretation would lead to an absurd result where the same asset could be treated differently depending on its current state of attachment rather than its inherent nature. The Court was unwilling to adopt such an inconsistent reading.

With the dismissal of the review petitions, all pending applications related to the matter were also disposed of, bringing comprehensive closure to the litigation.

Impact on the Telecom Industry

The Supreme Court's decision has significant financial and operational implications for India's telecom sector. With the ITC eligibility on telecom towers now confirmed at the highest judicial level, the key beneficiaries of this ruling include:

• Bharti Airtel Ltd., one of India's largest telecom operators, which was the primary respondent in this case and stands to benefit from substantial ITC claims on its tower infrastructure investments.

• Indus Towers, one of the world's largest tower companies by number of towers, which provides shared passive infrastructure to telecom operators across India.

• Elevar Digitel Infrastructure Pvt Ltd, which was also a party to the proceedings and benefits from the settled legal position.

For the telecom industry as a whole, this ruling provides much-needed certainty in tax planning and compliance. Telecom operators and tower companies can now confidently claim ITC on the GST paid on the procurement, erection, and installation of mobile telecom towers. This reduces the effective cost of tower infrastructure and could incentivise further investment in expanding network coverage, particularly in rural areas.

Given India's ambitious targets for 5G rollout and digital connectivity, the confirmation of ITC eligibility on tower infrastructure is a welcome development. It aligns the tax treatment of telecom towers with the government's broader policy objective of promoting digital infrastructure development.

Broader Implications for Infrastructure-Intensive Industries

While this ruling directly concerns the telecom sector, its reasoning carries broader implications for other infrastructure-intensive industries. Industries involved in energy (solar panels, wind turbines), oil and gas (pipelines, rigs), and heavy manufacturing may draw support from the principles established in this case.

The key legal principle affirmed by the Supreme Court is that the classification of an asset as movable or immovable must be based on the following considerations:

• Whether the asset is manufactured off-site and assembled at the location of use.

• Whether the asset can be dismantled and relocated without structural damage or destruction of its utility.

• Whether the attachment to the earth is for operational stability rather than permanence.

• The intent behind the fixation, specifically whether the asset is meant to be a permanent accession to the land or merely placed for functional purposes.

These principles offer a useful analytical framework for businesses in other sectors assessing the movability of their assets and the corresponding ITC implications under GST. Companies deploying modular infrastructure or equipment mounted on foundations for stability should take note of this settled position.

Key Takeaways

The following are the essential takeaways from the Supreme Court's dismissal of the review petitions:

• ITC Eligibility Confirmed: Telecom companies are entitled to claim Input Tax Credit on GST paid on mobile telecommunication towers. The ITC restriction under Section 17(5)(d) of the CGST Act, applicable to immovable property, does not extend to telecom towers.

• Towers Are Movable Property: Mobile telecom towers are classified as movable assets. Their fixation to the ground is for operational stability and does not change their inherent character as movable goods.

• Exclusion from Plant and Machinery Definition Is Not Determinative: The fact that telecom towers are not included in the Explanation's definition of "plant and machinery" does not automatically make them immovable property. The movability of an asset is determined by its physical characteristics and the nature of its attachment to the earth.

• Finality of the Legal Position: With the dismissal of both the SLPs and the review petitions, the legal position on ITC eligibility for telecom towers is now final and settled. The Revenue has exhausted its avenues of challenge before the Supreme Court.

• Precedential Value for Other Industries: The principles laid down in this case regarding the classification of assets as movable or immovable can be applied by other infrastructure-intensive industries facing similar ITC disputes under GST.

Conclusion

The Supreme Court's dismissal of the Centre's review petitions in Commissioner, CGST Appeal-I, Delhi vs. Bharti Airtel Ltd. and Ors. marks a definitive conclusion to the long-running dispute over ITC eligibility on mobile telecommunication towers under the GST regime. By upholding the Delhi High Court's ruling and declining to engage in "hair-splitting" interpretations of Section 17(5)(d) of the CGST Act, the Supreme Court has provided a clear, principled framework for determining whether assets fixed to the earth qualify as immovable property.

For the telecom industry, this ruling eliminates a significant area of tax uncertainty and reduces the effective cost of tower infrastructure. For Indian businesses more broadly, it reaffirms that the classification of an asset as movable or immovable should be guided by its physical nature and the purpose of its attachment to the earth, rather than by narrow statutory technicalities.

As India continues to invest in digital infrastructure and 5G expansion, the tax efficiency provided by this ruling is a meaningful boost for telecom operators and infrastructure companies. It aligns the tax framework with the economic reality that telecom towers, though fixed to the ground for operational purposes, remain movable assets driving the nation's connectivity objectives.

Businesses in sectors with similar infrastructure characteristics should review their ITC claims in light of this ruling and revisit any prior denials of credit based on incorrect classification of their assets as immovable property.