New Delhi: The Supreme Court on Friday said that cellular operators are liable to pay property tax to civic bodies on cell phone towers.
A bench comprising justices Ranjan Gogoi and Prafulla C. Pant upheld state laws of Gujarat and Maharashtra that defined a component of the mobile tower as a building to charge property tax.
Cellular operators including Reliance Communications, Viom Infra Networks, Idea Cellular Limited had challenged the validity of the laws before the apex court and contended that mobile towers are taxed separately by the state, property tax cannot be imposed.
“Income derived from land and a tax on the land itself is one such example” the Supreme Court explained.
In 2013, the Gujarat high court had also upheld the state law to impose property tax while the Bombay high court did not rule on the issue.
Experts said that the ruling will have a significant impact on the telecom sector.
“It appears that the ruling makes it more expensive to construct and operate towers which is something that will impact the roll out of network infrastructure as well as affordability to consumers, as ultimately these costs may have to be passed on to consumers,” said Rajan Mathews, Director General of Cellular Operators Association of India.
“The judgement will disappoint the mobile operators and tower companies. However, it reflects the larger reality that while state governments have no say in telecom licensing, they have a significant role in issues like land, power etc that impact costs of players,” said Mahesh Uppal , telecom consultant and director at Comfirst, a Delhi based communications consultancy.