Telecom Tower ITC Victory Survives Supreme Court Review

Why a Two-Page Review Order Matters to the Telecom Sector

The Supreme Court's order dated 19 August 2026 in Commissioner, CGST Appeal 1, Delhi Etc. Versus Bharti Airtel Limited Etc. - 2026 (8) TMI 1297 - SC Order, is extremely brief. The Court condoned the delay, considered the review petitions and the grounds raised, found no error apparent on the face of its earlier order, and dismissed them. Pending applications were also disposed of.

The brevity of the order should not obscure its practical importance. It represents the Revenue's unsuccessful attempt to reopen the Supreme Court's 2025 dismissal of the special leave petitions arising from the Delhi High Court's ruling on input tax credit for telecommunication towers. The 2026 order does not provide fresh reasoning on Section 17(5)(d) of the CGST Act, 2017. Its significance lies in leaving the earlier procedural and substantive position undisturbed.

The Controversy Beneath the Review: Is a Telecom Tower Really Immovable?

Section 16 of the CGST Act, 2017 recognises a registered person's general entitlement to input tax credit on goods or services or both used in the course or furtherance of business, subject to statutory conditions and restrictions. Section 17(5)(d), however, blocks credit on goods or services or both received for the construction of immovable property on the taxpayer's own account, even when used for business, subject to the statutory treatment of plant and machinery.

The Explanation to Section 17 specifically excludes telecommunication towers from the expression 'plant and machinery'. The Department treated this exclusion as supporting the denial of ITC on inputs and input services used for setting up towers. The taxpayers responded that exclusion from a defined expression and classification as immovable property are separate questions. According to them, Section 17(5)(d) cannot apply unless the tower first answers the description of immovable property.

This distinction proved decisive. A statutory provision stating that a tower is not included in 'plant and machinery' does not, without more, declare that the tower is immovable. The character of the asset must be determined by examining how and why it is attached, whether that attachment is intended to be permanent, and whether the tower can be dismantled, transported and reassembled without losing its essential identity.

The CENVAT Foundation: Supreme Court Treats Towers as Movable Goods

Before the GST dispute reached the Delhi High Court, the Supreme Court examined the legal character of mobile towers and prefabricated buildings in M/s BHARTI AIRTEL LTD. Versus THE COMMISSIONER OF CENTRAL EXCISE, PUNE - 2024 (11) TMI 1042 - Supreme Court. That case arose under the CENVAT Credit Rules, 2004, and therefore did not directly decide entitlement to ITC under the CGST Act. Its importance for GST lies in the Court's detailed examination of the broader legal distinction between movable and immovable property.

The Supreme Court explained that mere attachment to the earth does not automatically make an article immovable. It identified relevant considerations, including the nature and object of annexation, the intention behind the attachment, functionality, permanence and marketability. A large item of equipment may require a firm foundation for safe and effective operation and yet remain movable if the attachment is not intended to be permanent and the equipment can be dismantled and relocated.

The towers before the Court were brought to site in completely knocked-down or semi-knocked-down form, assembled and fixed with nuts and bolts for stability. They could be dismantled, shifted and reassembled elsewhere without losing their identity. Their fixation supported the functioning of the tower and antenna; it did not permanently improve or benefit the land. The Supreme Court consequently treated the towers and prefabricated buildings involved in that dispute as movable property and as goods for the purposes of the CENVAT framework.

The Delhi High Court Brings the Movability Test into GST

The Delhi High Court directly addressed the GST issue in a common judgment dated 12 December 2024, reported as 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 and bearing Neutral Citation 2024:dhc:9681-DB. Bharti Airtel Limited, Indus Towers Limited, and Elevar Digitel Infrastructure Private Limited filed the petitions.

Bharti Airtel challenged an Order-in-Original dated 24 March 2023 and an appellate order dated 31 May 2024 denying ITC. Indus Towers and Elevar Digitel challenged show-cause notices based on similar allegations. In the Indus Towers matter, the notice covered the period from 1 July 2017 to 31 March 2024 and related to multiple GST registrations across India. The common foundation of the proceedings was that inputs and input services had been used to construct telecommunication towers allegedly falling within Section 17(5)(d).

The taxpayers argued that the steel and metal tower structures were capable of being dismantled and relocated. The concrete base provided stability, but operational necessity did not convert the towers into permanent parts of the land. They relied on the Supreme Court's CENVAT decision in Bharti Airtel and the Delhi High Court's earlier decision in Vodafone Mobile Services Limited.

The Department did not dispute the conclusions reached under the CENVAT regime but sought to distinguish them on the ground that the GST Explanation expressly excludes telecommunication towers from 'plant and machinery'. The Delhi High Court rejected that argument. It held that the exclusion did not create a legal fiction deeming towers to be immovable property.

The Two-Stage Test: Characterise the Asset Before Blocking the Credit

The Delhi High Court's reasoning can be understood as a two-stage enquiry. The first question is whether the particular asset is movable or immovable. This must be decided by reference to the recognised tests of annexation, intention, functionality, permanence, dismantling and marketability.

Only if the asset is found to be immovable does the second question arise: whether Section 17(5)(d), read with the relevant expression concerning plant and machinery, blocks the credit. Reversing this sequence would allow the exclusion from 'plant and machinery' to replace the separate statutory requirement that the construction must relate to immovable property.

Applying the Supreme Court's reasoning, the Delhi High Court held that the towers could not be treated as immovable property. They did not satisfy the tests of permanence or permanent attachment to the earth. Their placement on concrete bases enabled them to withstand natural forces and function safely; it did not establish an intention to merge them permanently with the land.

When the Statutory Foundation Failed, the Demands Could Not Survive

Once the towers were held movable, the essential condition for applying Section 17(5)(d) was absent. The Delhi High Court therefore held that denying ITC on the ground that the towers were immovable property could not be sustained.

The Court allowed Bharti Airtel's petition and quashed the adjudication and appellate orders dated 24 March 2023 and 31 May 2024. It also allowed the petitions filed by Indus Towers and Elevar Digitel and quashed the show-cause notices dated 25 July 2024, as they proceeded on the untenable premise that mobile towers were immovable property.

The ruling did not state that every item commercially described as a telecom tower will qualify for ITC regardless of its design or installation. Its reasoning requires an examination of the asset's actual character. The decisive point is that exclusion from 'plant and machinery' cannot substitute for proof of immovability.

The 2025 Supreme Court Order: Revenue's Article 136 Challenge Fails

The Revenue challenged the Delhi High Court judgment before the Supreme Court. In COMMISSIONER, CGST APPEAL-1, DELHI ETC. Versus M/s BHARTI AIRTEL LIMITED ETC. - 2025 (8) TMI 707 - SC Order, the Supreme Court condoned a 105-day delay in filing the petitions.

After hearing the Revenue and the respondents appearing on caveat, the Court stated that it was not satisfied that the matters were fit for exercise of its discretionary jurisdiction under Article 136 of the Constitution. It accordingly dismissed the special leave petitions and disposed of the pending applications.

The procedural nature of this order is important. The Supreme Court did not independently analyse Section 17(5)(d), the definition of plant and machinery, or the factual tests of movability. The correct position is that the Revenue's challenge failed and the Delhi High Court judgment remained undisturbed. The 2025 order should not be presented as a separate reasoned judgment adopting every part of the High Court's analysis.

The Final Attempt: Revenue Seeks Review of the SLP Dismissal

Thereafter, the Revenue filed Review Petition (Civil) Nos. 10422-10424 of 2026 in the special leave proceedings. Review jurisdiction is narrow. It is not a fresh appeal or an opportunity to reargue the entire case. The central enquiry is whether the earlier order contains an error apparent on the face of the record or any other recognised ground requiring reconsideration.

On 19 August 2026, the Supreme Court condoned the delay in filing the review petitions. It then recorded that it had carefully considered the review petitions and the grounds stated in them. The Court concluded that the earlier order contained no error apparent on the face of the record that would justify reconsideration.

Finding no merit, the Court dismissed the review petitions and disposed of all pending applications. The order contains no separate discussion of the grounds urged by the Revenue and no fresh examination of the substantive GST controversy.

Review Door Closed, GST Merits Not Revisited

The 2026 order holds that the Revenue failed to identify an apparent error in the Supreme Court's 2025 order dismissing the special leave petitions. It therefore closes the review proceedings and leaves the earlier order unchanged.

The review dismissal does not add a new layer of detailed reasoning on telecom tower ITC. It does not independently interpret Section 17(5)(d), reapply the tests of movability, or separately rule on the effect of excluding towers from 'plant and machinery'. Those substantive propositions remain in the Delhi High Court judgment and, on the broader movable-property question, in the Supreme Court's earlier CENVAT decision.

This distinction matters for accurate legal reporting. The Delhi High Court judgment remains undisturbed because both the special leave challenge and the subsequent review attempt failed. However, the non-reasoned dismissal of the challenge and the brief rejection of review should not be converted into a detailed Supreme Court pronouncement on GST merits that the Court itself did not make in those orders.

Practical Finality Without a Fresh Merits Judgment

For the parties to these proceedings, the outcome is clear. The Delhi High Court's relief continues to operate; the Revenue's special leave petitions remain dismissed, and the effort to reopen that dismissal through review has also failed.

For the wider telecom sector, the Delhi High Court's two-stage approach remains highly significant. An authority seeking to invoke Section 17(5)(d) cannot begin and end with the statutory exclusion of telecommunication towers from 'plant and machinery'. It must first establish, on the facts and under the applicable legal tests, that the tower is immovable property.

The 2026 review order strengthens the practical stability of that result without substituting for the reasoning in the earlier judgments. Professionals should therefore cite each decision for its proper purpose: the CENVAT Bharti Airtel judgment for the legal tests of movability; 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  for their application under GST; COMMISSIONER, CGST APPEAL-1, DELHI ETC. Versus M/s BHARTI AIRTEL LIMITED ETC. - 2025 (8) TMI 707 - SC Order for the dismissal of the Article 136 challenge; and Commissioner, CGST Appeal 1, Delhi Etc. Versus Bharti Airtel Limited Etc. - 2026 (8) TMI 1297 - SC Order for the rejection of the Revenue's review petitions.

The Retrospective Amendment Does Not Eliminate the First Question

The Finance Act, 2025, retrospectively aligned the language of Section 17(5)(d) by substituting 'plant and machinery' for the earlier expression 'plant or machinery', with effect from 1 July 2017. This addresses the difference between the wording of clause (d) and the defined expression.

That amendment does not, by itself, declare every telecommunication tower to be immovable property. Even after the expressions are aligned, Section 17(5)(d) remains concerned with the construction of immovable property. The threshold enquiry into the asset's legal character therefore continues to matter. The 2026 review order does not separately examine this legislative development.

Documentation Will Decide Whether the Movability Argument Holds

The decisions do not dispense with the need for factual evidence. Telecom operators and infrastructure providers should retain engineering specifications, installation drawings, bills of material, contracts, asset registers, relocation records, and evidence that tower components can be dismantled, transported, and reassembled without losing their essential character.

The use of foundations, cement, structural supports, nuts, or bolts is not conclusive by itself. The relevant question is whether the attachment is intended to make the tower a permanent part of the land or merely to provide stability and safe operation. Accounting treatment alone is also unlikely to answer that legal question.

A claim based on the Bharti Airtel line of cases should therefore link the judicial tests to the actual design and installation of the particular tower. The stronger the technical evidence of dismantlability, relocation, and continued functionality, the stronger the basis for contending that Section 17(5)(d) is not attracted.

The Decisive Principle: Excluded from "Plant and Machinery" Does Not Mean Immovable

The legal journey from the CENVAT decision to the Delhi High Court, through the 2025 special leave proceedings and the 2026 review order, leads to one central proposition. A telecommunication tower may be excluded from the statutory definition of 'plant and machinery', but that exclusion does not automatically convert it into immovable property.

The correct sequence remains: determine the facts, classify the asset as movable or immovable, and only then apply the blocked-credit provision. The Delhi High Court provided the detailed GST reasoning. The Supreme Court declined Article 136 interference in 2025 and found no apparent error warranting review in 2026.

The Revenue's review remedy has therefore ended without disturbing the relief granted by the Delhi High Court. For taxpayers, the outcome is favourable but fact-dependent. For the Department, any future denial of ITC must rest on the asset's actual legal character and not solely on the words excluding telecommunication towers from 'plant and machinery'.

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