Industry hails SC granting telcos right to claim tax credits on infra duties

New Delhi, Nov 20 Industry players on Wednesday welcomed the Supreme Court’s ruling in favour of telecom companies, which affirmed their entitlement to claim credit for duties paid on parts such as tower components and green shelters.

The judgement is likely to benefit key players like Bharti Airtel, Vodafone, Tata Teleservices, and Indus Towers, by allowing them to claim tax credits previously considered ineligible.

The judgment was passed by a division bench of Justices B.V. Nagarathna and N. Kotiswar Singh. "We have allowed the appeals in the main matter as well as connected matters by the companies. We have upheld the 2021 Delhi High Court decision and have set aside the Bombay High Court decision of 2014 in Bharti Airtel," Justice Singh said.

The Cellular Operators Association of India (COAI) hailed the SC move to grant telecom companies the right to claim tax credits on infrastructure duties.

“We welcome the Supreme Court’s judgement affirming the telecom industry’s entitlement to claim the credit for taxes and duties paid on towers and its parts - including green shelters. The Apex Court's judgement will not only help the industry in fulfilling the compliances, but will also help reduce the financial burden on the sector," COAI Director General, Lt Gen Dr S.P. Kochhar (retd), said.

By confirming the view of the Delhi High Court, "this verdict reinforces fairness and consistency in taxation. We await the detailed judgement for further clarity on its implementation", he added.

The SC decision overturned a previous judgment by the Bombay High Court, which had classified these items as non-capital goods. This had denied the telecom operators "Cenvat credit" for the duties paid.

The Cenvat credit refers to the set-off available to manufacturers if they utilise some specific inputs for manufacturing their products.

Under the Cenvat credit scheme, credit is allowed for duty paid on "specified inputs/capital goods" and service tax paid on "specified input services" used in the manufacture of finished goods. Credit can be utilised towards payment of duty on finished goods subject to the fulfilment of certain conditions, according to the government.

Digital Infrastructure Providers Association (DIPA) Director General Manoj Kumar Singh said this ruling also provides crucial financial relief to infrastructure providers who form the backbone of India's digital revolution.

"The judgment will significantly improve the financial health of infrastructure providers, enabling them to accelerate the deployment of digital infrastructure across India. This comes at a crucial time when our nation is rapidly advancing toward 5G expansion, digital transformation and the accelerated commercialisation of the 6G stack," he said.

The ruling will have far-reaching implications for the sector's growth trajectory, delivering multiple transformative benefits to India's digital infrastructure landscape, Singh added.