CESTAT Allows Indus Towers’ CENVAT Credit on Telecom Towers, Dismisses Revenue Appeals

March 17, 2026 : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh Bench, has allowed the appeals filed by M/s Indus Towers Ltd., holding that CENVAT credit on inputs, capital goods, and input services used for telecom towers and shelters is admissible. At the same time, the Tribunal dismissed the Revenue’s appeals challenging the dropping of demands.

The Division Bench comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) was dealing with cross-appeals arising from two Orders-in-Original dated 21.02.2018 passed by the Commissioner of CGST, Rohtak, pertaining to the financial years 2014–15 and 2015–16.

M/s Indus Towers Ltd., engaged in providing passive telecom infrastructure support services, had availed CENVAT credit on inputs, capital goods, and input services used for setting up and operating telecom towers and shelters. The dispute arose from multiple show cause notices alleging wrongful availment of such credit. The adjudicating authority had partly confirmed the demands and partly dropped them, leading to cross-appeals by both the assessee and the Revenue.

The Tribunal identified two core issues: denial of CENVAT credit on (i) inputs and capital goods relating to towers and shelters, and (ii) input services used in connection with such infrastructure.

On the first issue, the Tribunal held that the matter is no longer res integra, relying on the Supreme Court’s ruling in Bharti Airtel Ltd. v. CCE, Pune, which clarified that telecom towers and pre-fabricated shelters qualify as “goods” and not immovable property, since they can be dismantled and relocated without substantial damage. It further noted that although such towers are not transmission devices themselves, they are essential for the functioning of antennas and provision of telecom services.

The Tribunal also referred to consistent judicial precedents, including decisions of High Courts and earlier rulings in the assessee’s own cases, affirming that such infrastructure qualifies as inputs or capital goods used for providing output services, thereby entitling the assessee to CENVAT credit.

On the issue of input services, the Tribunal relied on the Larger Bench decision in Idea Cellular Ltd. v. CST, Mumbai-IV, which recognized the wide scope of “input service” under the CENVAT Credit Rules. It held that services used for setting up and operating telecom towers are eligible for credit, provided they are used in the course of providing taxable output services.

In view of these settled legal principles, the Tribunal concluded that denial of CENVAT credit by the Department was unsustainable. It set aside the impugned orders to the extent they denied credit and allowed the appeals filed by Indus Towers Ltd.

With respect to the Revenue’s appeals, the Tribunal found no infirmity in the adjudicating authority’s decision to drop certain demands and accordingly dismissed those appeals.

Result:

• Assessee’s appeals allowed with consequential relief
• Revenue’s appeals dismissed

Cause Title: M/s Indus Towers Ltd. v. Commissioner of CGST, Gurugram
Case Nos.: Service Tax Appeal Nos. 60669 & 60670 of 2018; 60865 & 60866 of 2018
Coram: S. S. Garg (Judicial Member), P. Anjani Kumar (Technical Member)