Telecommunication towers are classified as movable property, not immovable, thus entitled to input tax credit under the Central Goods and Services Tax Act.

JUDGMENT

YASHWANT VARMA, J. (Oral)

CM APPL. 55156/2024 (Ex.) in 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 laying similar allegations.

3. For purposes of brevity, we propose to take note of the salient facts as they obtain in the writ petition preferred by Indus Towers. The impugned SCN under Section 74 of the CGST Act raises a demand of tax along with interest and penalty for the period 01 July 2017 to 31 March 2024 relating pan India to 48 Goods and Services Tax registrations of the writ petitioner. Indus Towers explains that it is engaged in the business of providing passive infrastructure services to telecommunication service providers.

4. As was noticed in the prefatory parts of this decision, the impugned SCNs’ seek to deny input tax credit on inputs and input services used for setting up passive infrastructure on the ground that the same were used in the construction of telecommunication towers and consequently falling within the ambit of clause (d) of Section 17 (5) of the CGST Act. The relevant part of Section 17 is extracted hereinbelow:-

“17. Apportionment of credit and blocked credits.

xxxx xxxx xxxx

(5) Notwithstanding anything contained in sub-section (1) of Section 16 and sub-section (1) of Section 18, input tax credit shall not be available in respect of the following, namely:—

(a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:—

(A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles;

(aa) vessels and aircraft except when they are used—

(i) for making the following taxable supplies, namely:—

(A) further supply of such vessels or aircraft; or (B) transportation of passengers; or (C) imparting training on navigating such vessels; or (D) imparting training on flying such aircraft;

(ii) for transportation of goods;

(ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa):

Provided that the input tax credit in respect of such services shall be available—

(i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein;

(ii) where 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