Supreme Court’s Important Ruling For Telecom Giants

On Wednesday, the Supreme Court ruled in favour of Bharti Airtel, Vodafone Idea, Tata Services, Indus Towers and other telecom operators in a 76-page judgement. Now, they can claim central value-added tax or Cenvat credits on central excise duties paid by them on towers and their parts, green shelters, printers, office chairs, etc. Justice BV Nagarathna and N Kotiswar Singh passed this 76-page judgement. 

In 2014, the Bombay High Court ruled that towers, etc., weren’t capital goods as per the Cenvat Credit Rules 2004. So, telcos weren’t going to get any credit on these. However, with the new ruling, the Supreme Court has significantly relieved the telecom sector. 

Telecom service providers shared that SC’s ruling will significantly improve the industry’s financial health, allowing them to employ digital infrastructure across India. They added that the judgement would release substantial working capital to be reinvested in infrastructure development and reduce service delivery costs. 

The dispute of Telcos for Cenvat credits started in 2006 when tax authorities issued a notice to Bharti Airtel. In this notice, the tax authorities accused the company of wrongly applying Cenvat credits on goods like towers and office equipment. According to authorities, these items weren’t essential to provide services. The tax authorities also penalised Bharti Airtel with an equal amount of credit and interest.