M/S BHARTI AIRTEL LTD. versus THE COMMISSIONER OF CENTRAL EXCISE, PUNE

Citation: [2024] 11 S.C.R. 1525 · Decided: 20-11-2024 · Supreme Court of India · Bench: B.V. NAGARATHNA · Disposal: Disposed off

Cited by 1 judgment(s) · cites 11 · see the full citation network in Lexace

Judgment (excerpt)

[2024] 11 S.C.R. 1525 : 2024 INSC 880
M/s Bharti Airtel Ltd. 
v. 
The Commissioner of Central Excise, Pune
(Civil Appeal No(s). 10409-10410 of 2014)
20 November 2024
[B.V. Nagarathna and  
Nongmeikapam Kotiswar Singh,* JJ.]
Issue for Consideration
Whether the mobile service providers who pay excise duties 
on various items for setting up their business more particularly 
for erection of mobile towers and peripherals like pre-fabricated 
buildings etc. can take the benefit of CENVAT Credit under the 
CENVAT Credit Rules, 2004 for the purpose of payment of service 
tax on the output services rendered by them.
Headnotes†
CENVAT Credit Rules, 2004 – Rules 3, 2(k), 2(a)(A)(i), (iii) – 
“inputs”; “goods”/“capital goods” – General Clauses Act – 
ss.3(36), 3(26) – Transfer of Property Act, 1882 – s.3 – Mobile 
Service Providers (MSPs), if entitled to CENVAT credit on 
mobile towers and prefabricated buildings (PFBs) – Conflicting 
views of the High Court of Bombay and Delhi:
Held: Applying the tests of permanency, intendment, functionality 
and marketability, it is evident that mobile towers and PFBs are 
not immovable but movable within the meaning of Section 3 of 
the Transfer of Property Act, r/w Section 3(36) of the General 
Clause Act – Considering the nature of annexation of the tower 
to the earth, it is seen that the annexation is not for permanent 
annexation to the land or the building as the tower can be removed 
or relocated without causing damage to it – The attachment of the 
tower to the building or the land is not for the permanent enjoyment 
of the building or the land – Further, the tower is fixed to the land 
or building for enhancing the operational efficacy and proper 
functioning of the antenna which is fixed on the tower by making 
it stable and wobble free The fact that the tower, if required can be 
removed, dismantled in the Completely knocked down condition 
* Author
1526
[2024] 11 S.C.R.
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and Semi-knocked down condition and sold in the market is not 
disputed – Mobile towers and PFBs are movable properties and 
hence, “goods” – Towers and shelters (PFBs) support the Base 
Transceiver System (BTS)/antenna for effective transmission of 
mobile signals and thus, enhance their efficiency and since these 
articles are components/accessories of BTS/antenna which are 
admittedly “capital goods” falling under Chapter 85 within sub-clause 
(i) of Rule 2(a)(A) of CENVAT Rules, these items consequently are 
covered by the definition of “capital goods” within the meaning of 
sub-clause (iii) read with sub-clause (i) of Rule 2(a)(A) of CENVAT 
Rules – Further, since these are used for providing output service, 
i.e., mobile telecommunication service, and since these are 
“capital goods” received in the premises of the provider of output 
service as contemplated under Rule 3(1)(i), the Assessees would 
be entitled to CENVAT credit on the excise duties paid on these 
goods – Thus, tower and the PFBs are not immovable property 
but are “goods”/ “capital goods” within the meaning of Rule 2(a)
(A)(iii) and since these are used for providing output service, 
these can be considered to be “inputs” within the meaning of Rule 
2(k) – CENVAT credit can be availed in respect of these goods for 
payment of service tax – Any item so long it qualifies as a “good” 
and is “used” for providing output service, would come within the 
purview of “input” under Rule 2(k) and excise duty paid on such 
items can be claimed as CENVAT credit which may in turn be used 
for payment of service tax for the output service provided by the 
MSPs – Judgment of the Delhi High Court in Vodafone Mobile 
Services Limited v. CST, Delhi 2019 [(27) G.S.T.L. 481 (Del.)] 
upheld, while that of the Bombay High Court in Bharti Airtel case 
is set aside. [Paras 11.9.9, 11.9.18, 11.11.12, 11.12.1,11.13, 11.14]
Words and Phrases – “accessory” – Meaning – Whether mobile 
towers, prefabricated buildings (PFBs) are accessories of 
antenna and Base Transceiver System (BTS):
Held: Any such item which adds to the beauty, convenience or 
effectiveness of some other items can be said to be accessory of 
that other thing and it may or may not be essential for functioning 
of main machinery – The tower is a structure fixed to the earth or 
building on which microwave antenna is fastened to provide the 
necessary height and stability to the antenna by making it steady 
and wobble free – The function of antenna as part of the BTS 
is to r

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