TaxTMI 
TaxTMI 
12 Aug 2026 
The Journey So Far - From Statutory Exclusion to the Test of Immovability
Part I of this article examined the controversy surrounding input tax credit (ITC) on telecommunication towers, beginning with its statutory foundation. Section 16 of the Central Goods and Services Tax Act, 2017 (CGST Act) recognises the general entitlement to ITC on goods or services, or both, used in the course or furtherance of business. Section 17(5), however, blocks credit in specified situations. Clauses (c) and (d), in particular, concern works-contract services and goods or services used for the construction of immovable property. The Explanation appearing after Section 17(6), applicable for the purposes of Chapters V [Input Tax Credit] and VI [Registration], specifically excludes telecommunication towers from the definition of "plant and machinery".
That exclusion gives rise to the central distinction examined in this series. Excluding a telecommunication tower from "plant and machinery" does not, by itself, make the tower immovable property. The two expressions perform different statutory functions. Since Section 17(5)(d) applies to the construction of immovable property, the legal character of the tower must first be determined independently. Only thereafter can the effect of its exclusion from "plant and machinery" be considered.
Part I therefore considered the principles for distinguishing movable from immovable property. Mere attachment to the earth is not conclusive. Relevant considerations include the nature and purpose of the attachment, the intention behind it, the degree of permanence, functionality, the possibility of dismantling and relocation, and the marketability of the dismantled article. Equipment may require firm attachment to a foundation for stability and effective functioning without thereby becoming a permanent part of the land.
Against this background, Part I examined the Supreme Court's decision in M/s BHARTI AIRTEL LTD. Versus THE COMMISSIONER OF CENTRAL EXCISE, PUNE - 2024 (11) TMI 1042 - Supreme Court. Although the case arose under the CENVAT Credit Rules, 2004, the Court examined the more fundamental question of whether the mobile towers and prefabricated buildings involved in the appeals were movable or immovable property. It identified six considerations-the nature of annexation, object of annexation, intention, functionality, permanency and marketability-and applied them to the structures before it.
The Supreme Court found that those towers were assembled on site from components, fixed with nuts and bolts essentially for stability, and capable of being dismantled, transported and reassembled elsewhere without losing their essential character. Their fixation served the effective functioning of the telecom equipment rather than the permanent enjoyment of the land. The Court accordingly held the towers and prefabricated buildings involved in the case to be movable properties and, consequently, "goods".
Part I ended with the question that arises under GST: if a telecommunication tower can remain movable despite being fixed to the earth, what is the effect of its specific exclusion from "plant and machinery"? Can that exclusion alone justify denial of ITC under Section 17(5)(d), or must the Revenue first establish that the tower is immovable property? Part II examines the application of Bharti Airtel under GST, the Delhi High Court's answer, the later Supreme Court proceedings, the Safari Retreats controversy, the retrospective legislative amendment and the treatment of other telecom infrastructure.
From CENVAT to GST - Why the Bharti Airtel Principle Remains Relevant
An initial objection may be that Bharti Airtel was decided under the CENVAT Credit Rules, 2004, and therefore cannot automatically determine ITC eligibility under the CGST Act. The two statutory schemes are undoubtedly different, and a credit entitlement under one regime cannot be mechanically transplanted into another.
The relevance of Bharti Airtel under GST, however, lies at a more fundamental level. Before deciding the CENVAT credit dispute, the Supreme Court determined the legal character of the structures themselves. Whether an article is movable or immovable does not change merely because the governing tax statute changes. The principles concerning annexation, permanence, intention, functionality, dismantling and relocation therefore remain relevant when the expression "immovable property" is applied under Section 17(5).
Bharti Airtel does not mean that CENVAT credit automatically becomes GST ITC. Rather, it supplies the legal foundation for answering the threshold question under GST: is the particular tower immovable property at all? Once that question is answered, the tax consequences must be worked out independently under the CGST Act.
The Delhi High Court Applies Bharti Airtel - The GST Issue Comes into Focus
The issue came before the Delhi High Court in M/s. Bharti Airtel Limited, Indus Towers Limited, Elevar Digitel Infrastructure Pvt Ltd (Earlier Known As Atc Telecom Infrastructure Pvt Ltd) Versus Commissioner, CGST Appeals-1 Delhi, Union Of India & Ors. - 2024 (12) TMI 998 - DELHI HIGH COURT .
All three petitions raised substantially the same question: could telecommunication towers be characterised as immovable property so as to attract Section 17(5)(d)? In Bharti Airtel's case, an Order-in-Original dated 24 March 2023 denying ITC was affirmed on appeal on 31 May 2024. Indus Towers and Elevar Digitel challenged show-cause notices raising similar allegations.
The proceedings against Indus Towers were particularly wide in scope. The show-cause notice issued under Section 74 covered the period from 1 July 2017 to 31 March 2024 and related to 48 GST registrations across India. ITC on inputs and input services used for setting up passive telecom infrastructure was sought to be denied on the ground that they had been used in the construction of telecommunication towers falling within Section 17(5)(d).
The controversy was therefore not confined to the statutory exclusion from "plant and machinery". The anterior question was whether the towers could first be regarded as immovable property. By the time the Delhi High Court decided the petitions, the Supreme Court had already examined the legal character of the towers in Bharti Airtel and held them to be movable.
The Heart of the Controversy - "Not Plant and Machinery" Does Not Mean "Immovable Property"
The Delhi High Court distinguished the two statutory concepts. The Explanation excludes telecommunication towers from "plant and machinery" but does not declare them immovable property. The exclusion cannot be stretched into a legal fiction that the legislature has not created.
Section 17(5)(d) applies to goods or services, or both, received by a taxable person for the construction of immovable property on its own account, including when used in the course or furtherance of business, subject to the statutory exception for plant and machinery. The existence of immovable property is therefore not a secondary consideration; it is a foundational condition for attracting the restriction.
The distinction can be expressed simply: saying that "X is not included in Y" does not establish that "X must therefore be Z". Likewise, Parliament's decision to exclude telecommunication towers from "plant and machinery" does not automatically place every such tower within the separate legal category of immovable property. Immovability must be established independently by applying the relevant legal principles to the asset concerned.
This interpretation gives effect to the entire provision. The tower exclusion is neither ignored nor rendered meaningless. It becomes relevant where the statutory conditions of the blocked-credit provision are otherwise satisfied, but it cannot displace the threshold requirement expressly contained in Section 17(5)(d).
The Two-Stage Enquiry - Immovability Must Come First
The controversy can therefore be understood through a two-stage enquiry. First, the asset must be classified as movable or immovable by examining the nature and object of its attachment, its intended permanence, its functionality, and its capacity for dismantling and relocation. Bharti Airtel is directly relevant at this stage.
Only if the asset is found to be immovable does the second stage arise: whether Section 17(5)(c) or Section 17(5)(d), read with the definition of "plant and machinery", blocks the credit. Clause (c) concerns works-contract services supplied for the construction of immovable property, except where used for the further supply of works-contract services. Clause (d) concerns goods or services received by a taxable person for the construction of immovable property on its own account. At this second stage, the exclusion of telecommunication towers from "plant and machinery" becomes material.
Reversing the sequence would deprive the words "immovable property" of their independent operation. If the exclusion itself were enough to make a tower immovable, it would perform a function that its language does not assign to it. The Delhi High Court's approach preserves the distinction between the character of the property and the scope of the statutory exclusion: the former must be determined first, and the latter becomes relevant thereafter.
Relief Granted - When the Foundation of ITC Denial Fails
Having considered the Supreme Court's ruling and the language of Section 17(5), the Delhi High Court held that the impugned proceedings could not survive merely because telecommunication towers were excluded from "plant and machinery". Once the towers were treated as movable property in accordance with Bharti Airtel, the essential basis for invoking Section 17(5)(d)-the construction of immovable property-was absent.
Accordingly, the Court quashed the orders challenged by Bharti Airtel and the show-cause notices challenged in the connected matters. Its reasoning articulates an important principle for the application of the blocked-credit provisions: the statutory exclusion cannot substitute for a finding that the asset is immovable.
The decision should not, however, be read as declaring that ITC must invariably be available for every structure commercially described as a telecommunication tower. The legal character of an asset depends on its design, construction, manner of installation and intended permanence. The judgments reject the blanket assumption that every tower becomes immovable merely because it is secured to a foundation.
The Supreme Court Challenge - Revenue's SLPs Dismissed
The Revenue challenged the Delhi High Court's common judgment before the Supreme Court. By an order dated 8 August 2025 in COMMISSIONER, CGST APPEAL-1, DELHI ETC. Versus M/s BHARTI AIRTEL LIMITED ETC. - 2025 (8) TMI 707 - SC Order, the Supreme Court condoned the delay but declined to exercise its discretionary jurisdiction under Article 136 of the Constitution and dismissed the special leave petitions.
The order does not independently examine the merits. It is therefore more accurate to state that the Revenue's challenge was dismissed and that the Delhi High Court judgment remains undisturbed, rather than to describe the order as a separate, reasoned affirmation of every proposition in that judgment.
Beyond Towers - Ducts and Manholes in OFC Networks
The ITC controversy in the telecom sector extends beyond towers. Optical fibre cable (OFC) networks require ducts, manholes and related supporting infrastructure. Their treatment also generated uncertainty because of the restrictions on immovable property under Section 17(5).
CBIC addressed this issue in Circular No. 219/13/2024-GST dated 26 June 2024. The Circular considered ITC on ducts and manholes forming part of OFC networks and recognised that they are used as part of the network through which telecommunication services are provided.
Ducts and manholes are not among the assets specifically excluded from "plant and machinery" in the Explanation. Subject to the statutory framework explained in the Circular, CBIC clarified that ITC on such ducts and manholes is not restricted under Section 17(5)(c) or Section 17(5)(d).
The distinction is instructive. The specific exclusion of telecommunication towers cannot be extended indiscriminately to every component of a telecommunications network. Each category of infrastructure must be examined under the statutory language applicable to it.
The Safari Retreats Dimension - When "Or" and "And" Diverged
Another important development arose from the Supreme Court's decision in Chief Commissioner of Central Goods and Service Tax & Ors. Versus M/s Safari Retreats Private Ltd. & Ors. - 2024 (10) TMI 286 - Supreme Court . The dispute did not concern telecommunication towers, but the Court's treatment of Section 17(5)(d) affected the broader structure of the blocked-credit provision.
At the relevant time, Section 17(5)(d) used the expression "plant or machinery", whereas the Explanation defined "plant and machinery". The Supreme Court treated this difference in language as material and did not equate the two expressions.
For telecommunication towers, that distinction could have been particularly important because the statutory Explanation specifically excludes them from "plant and machinery". If "plant or machinery" in clause (d) were regarded as a separate expression, a question could arise as to whether the exclusion in the definition of "plant and machinery" automatically controlled that clause. Parliament subsequently amended the provision to address this difference.
The Legislative Response - Retrospective Alignment of the Expressions
The Finance Act, 2025, substituted "plant and machinery" for "plant or machinery" in Section 17(5)(d), with retrospective effect from 1 July 2017. It also inserted Explanation 2, clarifying that, notwithstanding anything contained in a judgment, decree or order, every reference to "plant or machinery" in clause (d) shall be construed-and shall always be deemed to have been construed-as a reference to "plant and machinery".
The amendment aligns clause (d) with the defined expression "plant and machinery". Consequently, the exclusions contained in that definition, including telecommunication towers, cannot be avoided merely by relying on the earlier difference between "or" and "and".
The amendment, however, resolves only the terminological issue. It does not deem a telecommunication tower to be immovable property. Even after the retrospective amendment, Section 17(5)(d) applies only where the asset under consideration is first found to be immovable property. The character of the asset and the scope of the statutory exclusion therefore remain separate enquiries.
The Emerging Position - Fact First, Restriction Thereafter
The availability of ITC cannot be determined merely from the commercial description of an asset or from the exclusion of telecommunication towers from "plant and machinery". The first enquiry concerns the tower's actual character, examined in light of its design, manner and purpose of installation, intended permanence, and capacity for dismantling and relocation.
Where those facts establish movability, the threshold requirement of Section 17(5)(d) is not satisfied. Where the particular structure is found to be immovable, its exclusion from "plant and machinery" becomes relevant. The correct sequence is therefore: facts first, legal character next, and the credit restriction thereafter.
Practical Significance - Documentation May Determine the Outcome
Whether a telecommunication tower is movable or immovable ultimately depends on its design and manner of installation. Telecom operators and infrastructure providers should therefore maintain appropriate technical and documentary evidence, including engineering specifications, installation drawings, contractual arrangements, asset registers, relocation records, and material showing that the tower or its components can be dismantled, transported, reused, and reassembled without losing their essential character.
Neither accounting treatment nor the use of foundations, cement, nuts, bolts, or structural supports is conclusive. Such fixation may be necessary merely for stability and safe operation. A claim based on Bharti Airtel should therefore be supported by the actual facts and technical records relating to the particular tower, rather than by the case citation alone.
The Final Test - First Determine the Tower, Then the Credit
The controversy ultimately hinges on a simple distinction. A telecommunication tower may be specifically excluded from "plant and machinery", but that exclusion does not automatically render it immovable property. Bharti Airtel and the Delhi High Court's subsequent application of its principles reinforce that the asset's true character must first be determined independently.
First, determine whether the tower is movable or immovable; only then examine whether Section 17(5) blocks the ITC. The statutory exclusion cannot replace this basic enquiry. The nature of the asset must be determined before the tax consequence follows.
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