TaxTMI 
TaxTMI 
2024 (12) TMI 998
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....n W.P.(C) 13211/2024 Allowed, subject to all just exceptions. Application stands disposed of. CM APPL. 73112/2024 (Amendment) in W.P.(C) 13211/2024 Bearing in mind the disclosures made in the application, it is allowed. Application stands disposed of. W.P.(C) 13211/2024 W.P.(C) 14710/2024 & CM APPL. 61806/2024 (Interim Stay) W.P.(C) 16477/2024 & CM APPL. 69485/2024 (Interim Stay) 1. These three writ petitions assail the proceedings drawn by the respondents under the Central Goods and Services Tax Act, 2017 [CGST Act] and essentially question the characterization of telecommunication towers as immovable property and thus falling within the ambit of Section 17 (5) of the CGST Act and being illegible for input tax credit. 2. While Bharti Airtel assails the validity of an Order-in-Original dated 24 March 2023 as affirmed in appeal in terms of the order dated 31 May 2024 passed by the Commissioner of Central Tax Appeals-1, the writ petitions preferred by Indus Towers Limited [W.P. (C) 14710/2024] and Elevar Digitel Infrastructure Pvt Ltd W.P. (C) 16477/2024, impugn Show Cause Notices [SCNs] laying similar allegations. 3. For purposes of brevity, we propose to ....
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....ere received by a taxable person engaged- (I) in the manufacture of such motor vehicles, vessels or aircraft; or (II) in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him; (b) the following supply of goods or services or both- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance: Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, health and fitness centre; and (iii) travel benefits extended to employees on vacation such as leave or home travel concession: Provided that the input tax credit in respect of s....
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....e concrete structure on which those telecommunication towers are placed which could be treated as an immovable element of that equipment whereas the steel/metal structures are capable of being shifted to other locations. It is asserted that the errection of those towers on a concrete base is essentially for the purposes of according stability to the towers and that in itself would not detract from their basic characteristic of being items of equipment which are principally moveable. In view of the above, they would contend that the assumption that the installation of these towers results in the establishment of an immovable structure is misconceived. 6. According to the writ petitioners, the question of whether telecommunication towers are liable to be treated as immovable property is no longer res integra and stands conclusively settled in light of the recent decision rendered by the Supreme Court in Bharti Airtel Ltd vs. Commissioner of Central Excise, Pune 2024 SCC OnLine SC 3374. It was pointed out that Bharti Airtel, in fact, affirms the view that was taken by this Court in Vodafone Mobile Services Limited vs. Commissioner of Service Tax, Delhi 2018 SCC OnLine Del 12302, al....
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....vant statutory provisions under Section 3 (36) of the General Clauses Act, 1897 and Section 3 of the Transfer of Property Act, 1882, elaborately discussed the concept of immovable property, referring to a number of decisions including in Commissioner of Central Excise, Ahmedabad v. Solid and Correct Engineering Works, (2010) 5 SCC 122; Sirpur Paper Mills Ltd. v. Collector of Central Excise, Hyderabad, (1998) 1 SCC 400; Narne Tulaman Manufacturers Pvt. Ltd. Hyderabad v. Collector of Central Excise, Hyderabad, (1989) 1 SCC 172; Quality Steel Tubes (P) Ltd. v. Collector of Central Excise, U.P., (1995) 2 SCC 372 1995 and Mittal Engineering Works (P) Ltd. v. Collector of Central Excise, Meerut, (1997) 1 SCC 203; Triveni Engineering & Indus Ltd. v. Commissioner of Central Excise, (2000) 7 SCC 29 and other decisions rendered by the Delhi High Court, and applied the permanency test to come to the definitive finding that the entire tower and shelter are fabricated in the factories of the respective manufacturers and thereafter, are supplied in CKD condition to the mobile service providers. It was held that these are merely fastened to the civil foundation to make these wobble free and stabl....
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....is to be classified as immovable. Conversely, if the attachment is merely to facilitate the use of the item itself, it is to be treated as movable, even if the attachment is to an immovable property. 3. Intendment of the parties: The intention behind the attachment, whether express or implied, can be determinative of the nature of the property. If the parties intend that the property in issue is for permanent addition to the immovable property, it will be treated as immovable. If the attachment is not meant to be permanent, it indicates that it is movable. 4. Functionality Test: If the article is fixed to the ground to enhance the operational efficacy of the article and for making it stable and wobble free, it is an indication that such fixation is for the benefit of the article, such the property is movable. 5. Permanency Test: If the property can be dismantled and relocated without any damage, the attachment cannot be said to be permanent but temporary and it can be considered to be movable. 6. Marketability Test: If the property, even if attached to the earth or to an immovable property, can be removed and sold in the market, it can be said to....
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....e market in the same form and hence both, the functionality and marketability tests as applied in the aforesaid cases of Solid and Correct Engineering (supra), Triveni Engineering (supra) and Sirpur Paper Mills Ltd. (supra) can be said to be fulfilled in the present case. 11.9.5. The tower is brought to the site in CKD or SKD form and assembled at the site. If it is to be dismantled, it only involves unbolting of the nuts and bolts. Dismantling the tower may entail some damages, but such damages will be on the cables which may be required to be stripped of but no damage is caused to the tower. If one says that there may be some damage caused, it will be with reference to the BTS which consists of the antenna, connected by cables and other electrical equipment. But there is no damage to the tower per se. Similarly, in case of PFB, there is no damage to it, though damage may be caused to the wiring or cables connecting the various parts of the Base Transceiver System (BTS) or the Base Station Sub-System (BSS). 11.9.6. The tower which is affixed to the earth and thus appears to be immovable, can be dismantled from the existing site and re-assembled without causing an....
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....nded to provide stability to the working of the plant and prevent vibration/wobble free operation does not qualify for being described as attached to the earth under any one of the three clauses extracted above. That is because attachment of the plant to the foundation is not comparable or synonymous to trees and shrubs rooted in earth. It is also not synonymous to imbedding in earth of the plant as in the case of walls and buildings, for the obvious reason that a building imbedded in the earth is permanent and cannot be detached without demolition. Imbedding of a wall in the earth is also in no way comparable to attachment of a plant to a foundation meant only to provide stability to the plant especially because the attachment is not permanent and what is attached can be easily detached from the foundation. So also the attachment of the plant to the foundation at which it rests does not fall in the third category, for an attachment to fall in that category it must be for permanent beneficial enjoyment of that to which the plant is attached. It is nobody's case that the attachment of the plant to the foundation is meant for permanent beneficial enjoyment of either the foundatio....
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....er and pre-fabricated buildings (PFBs) are "goods" and not immovable property and since these goods are used for providing mobile telecommunication services, the inescapable conclusion is that they would also qualify as "inputs" under Rule 2(k) for the purpose of credit benefits under the CENVAT Rules. xxxx xxxx xxxx 11.13. For the foregoing reasons, we agree with the conclusions arrived at by the Delhi High Court and uphold the judgment rendered by it in Vodafone (supra) and dismiss the connected appeals being CA No. 5032-5035 of 2021, CA No. 5039-5040 of 2021, CA No. 5038 of 2021, CA No. 5036-5037 of 2021, CA No. 62 of 2022." 15. It is thus apparent that in Bharti Airtel, the Supreme Court has conclusively held that telecommunication towers cannot be construed as being immovable property. While arriving at that conclusion, the Supreme Court had reaffirmed the concept of immovable property as was lucidly explained in Commissioner of Central Excise, Ahmedabad vs. Solid and Correct Engineering Works & Others. (2010) 5 SCC 122 and where it had held as follows:- "29. The Indian law has developed on similar lines and the mode of annexation and object of an....
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.... to the plant and keep its operation vibration free. (iv) The setting up of the plant itself is not intended to be permanent at a given place. The plant can be moved and is indeed moved after the road construction or repair project for which it is set up is completed. 32. We may, at this stage, refer to the decisions of this Court which were relied upon by learned counsel for the parties in support of their respective cases. 33. In Sirpur Paper Mills Ltd. [(1998) 1 SCC 400] this Court was dealing with a near similar situation as in the present case. The question there was whether the paper machine assembled at site mainly with the help of components bought from the market was dutiable under the Central Excise Act, 1944. The argument advanced on behalf of the assessee was that since the machine was embedded in a concrete base the same was immovable property even when the embedding was meant only to provide a wobble free operation of the machine. Repelling that contention this Court held that just because the machine was attached to earth for a more efficient working and operation the same did not per se become immovable property. 34. The Court obs....