Setback for telcos as SC allows property tax on mobile towers

The Supreme Court has ruled that state governments can impose property tax on mobile towers, sending network providers into a frenzy. While it’s true that major telecom operators like Airtel and Vodafone among others do not actually set up their own towers in most areas, the added cost is going to be passed down to them from the companies providing such infrastructure. It might eventually end up trickling down to end users.

To begin with, telcos shell out anything from thousands to lakhs of rupees for cell towers set up on residential buildings. Adding property tax to the mix will make it an every more expensive proposition. But a bench headed by Justices Ranjan Gogoi and Prafulla C Pant has implied that a 2013 verdict of the Gujarat High Court concluding the levy of property tax on mobile towers by the state government to be beyond its scope, was not sound.

Mobile Tower

The Supreme Court’s judgment also affects several related cases including the Bombay High Court’s stance on the issue which has been indecisive so far. According to the new ruling, municipal bodies are within their rights to impose a levy on mobile towers and base transceiver station (BTS) equipment on roofs or terraces since the charge is not on the use of the plant and machinery, but the land and building.

The Gujarat Act defines ‘land’ as land which is being built upon or is built upon or covered with water, benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth and rights created by legislative enactment over any street. The Supreme Court verdict leaves cellular operators within Mumbai the choice to petition against retrospective taxation for the same.

Industry watchdogs are worried that consumers will suffer as service providers slow down on roll-out of infrastructure due to this added burden of property tax on mobile towers.