Supreme Court Dismisses Review Petition Confirming Telecom Towers Are Movable Property Eligible for ITC

Supreme Court Dismisses Review Petition Confirming Telecom Towers Are Movable Property Eligible for ITC

• Period Involved: July 1, 2017 to March 31, 2024.
• Core Legal Dispute: Tax authorities denied Input Tax Credit (ITC) on telecommunication towers by invoking Section 17(5)(d), treating them as immovable property.
• High Court Order: The High Court ruled in favor of the assessee, relying on the Supreme Court ruling in Bharti Airtel Ltd. v. Commissioner of Central Excise, holding that telecommunication towers fail the test of permanency and are not attached to the earth.
• Nature of Equipment: Mobile towers can be dismantled, relocated, and placed on concrete bases merely to withstand natural elements, without any intent of permanent attachment.
• SLP Dismissal: The Supreme Court declined to exercise its discretion under Article 136 of the Constitution and dismissed the Revenue’s Special Leave Petitions (SLPs).
• Review Petition: The Revenue subsequently filed a Review Petition against the dismissal of its SLPs, contending errors in the judgment.

• No Error Apparent: Held that there was no error apparent on the face of the record in dismissing the Special Leave Petitions.
• Movable Character Affirmed: Reaffirmed that applying generic property principles confirms telecommunication towers are movable property, placing them outside the restrictions of Section 17(5)(d).
• Specific Exclusion Clause: Clarified that the explicit exclusion of telecom towers from the definition of “plant and machinery” does not automatically categorize them as immovable property.
• Review Dismissed: Held that the review petition lacked merit and was accordingly dismissed in favor of the assessee [Paras 2 to 4].

• ITC Eligibility Granted: Input Tax Credit cannot be denied under Section 17(5)(d) on telecommunication towers as they are legally classified as movable property.
• Test of Permanency Upheld: Physical structures that can be dismantled, moved, and reassembled without damage do not constitute “immovable property,” even if temporarily fixed to concrete bases.
• Finality of Precedent: The Supreme Court’s dismissal of the Review Petition gives finality to the precedent set in Bharti Airtel Ltd., closing further challenge by the tax department on this issue.