NEW DELHI: In a relief for the telecom industry, the Supreme Court on Wednesday ruled in favour of major telecom services providers like Bharti Airtel, Vodafone Idea and Reliance Jio, allowing them to claim input tax credit (ITC) on key infrastructure components such as tower components, shelters, and other related materials.
The judgment overturned a 2014 ruling by the Bombay HC, which had classified these items as non-capital goods, denying telcos the right to claim ITC.
The SC bench, comprising Justices B V Nagarathna and N Kotiswar Singh, disagreed with this interpretation, stating that these items performed independent functions and couldn’t be considered part of a unified capital asset.
The decision aligns with a 2018 ruling by the Delhi HC, which had supported the telcos’ claim for ITC. The High Court had reasoned that telecom towers and shelters were not permanently affixed to the ground and could be dismantled and reassembled elsewhere.
The ruling will provide financial relief to telecom industry, which is grappling with various challenges, including high debt and intense competition.
The industry has welcomed the SC decision, highlighting its positive impact on the sector’s financial health and potential to accelerate deployment of 5G and other technologies.
Industry bodies like the Cellular Operators Association of India (and the Digital Infrastructure Providers Association have expressed optimism about the future of the sector in light of this ruling.