The Telecom operators Airtel, Vodafone, Idea is likely to pay the AGR over dues to avoid the stringent action of the Department of Telecom. The three companies together owe Rs. 1.47 Lakh Crore to the department of telecom towards AGR dues. However the DoT has passed an order not to take coercive step against the companies in case they failed to comply with the Supreme Court order.
Brief facts:
The telecom sector was liberalized by passing of National Telecom policy 1994, wherein the various licenses were issued to the telecom companies under section 4 of the Telegraph Act, 1885. As per the policy, the companies are required to pay a fixed license fee every year. As the rate of the said fee was higher and most of the telecom service providers were unable to pay the same, the service provider petitioned the Government of India to consider the high rates at which the fees were charged. Considering the rate of fees, a new package known as the “The National Telecom Policy, 1999 Regime” was adopted wherein the service providers were given an option to migrate from the fixed revenue charges to the revenue sharing fee applicable in the year 1999. The policy was notably in favor of the service providers.
The revenue sharing fee is the price paid to the central government for parting the exclusive privilege that the government had. The objective behind the new policy is to maximize the telecommunication in the rural and hilly areas out of the revenues paid by the telecom service providers which is termed as Adjusted Gross Revenue. The definition of the term gross revenue was incorporated in the Draft Licence agreement under clause 19 which included the various heads of income excluding the revenue from access charges paid to the other telecom service providers within India. The AGR was fixed at the rate of 15% which was later reduced to 8% in the year 2013.
Initially, the telecom service provider accepted the definition of The Adjusted Gross Revenue. Though the telecom service providers enjoyed the benefits of the policy, did not pay the AGR dues to the telecom department. When the DoT demanded the service providers to pay the same, the Association of Basic Telecom operators and the telecom service providers filed a petition before the Telecom Disputes Settlement and Appellate tribunal under section 14(a)(i) read with Section 14(A)(1) of the TRAI Act, 1997 disputing the definition of Adjusted Gross revenue.
The TDSAT remitted the matter to the TRAI for its consideration while observing that proper consultation was not made by the central government and further directed to list the matter before it after receiving the recommendations from TRAI. Challenging the Said order, the Union of India filed an appeal before the Supreme Court. Pending the appeal TRAI submitted the recommendations to TDSAT. Hence the Supreme Court dismissed the appeal observing that the Union of India could raise the grounds before TDSAT. However, TDSAT held that the grounds raised by the union of India cannot be considered after the disposal of the appeal by the Supreme Court and held its previous order as final. Through its fresh order dated 30/8/2007, TDSAT accepted most of the recommendations made by the TRAI.
Aggrieved by the said order, the Union of India filed an appeal before the Supreme Court. The Supreme Court after considering the merits of the case allowed the appeals filed by the Union of India. Against the said order AUSPI filed an appeal wherein the Supreme Court categorically dismissed the appeal stating that the tribunal did not have jurisdiction to exclude the revenue heads from the definition of AGR. Further held that since the licensee has agreed to the agreement and hence the decision of the central government with respect to the definition as final. In the year 2015 TDSAT allowed all the petitions that challenged the basis on which DoT charges the fee in favour of the telecom Service providers. Against the impugned order of TDSAT the union of India once again preferred an appeal.
In the above appeal the question involved was the definition of Adjusted Gross Revenue. The supreme court considered and discussed the various heads of the Adjusted Gross Revenue in detail and upheld the definition of the AGR prescribed by the central government vide its judgment dated 24th October, 2019 and directed the telecom service providers to clear its dues. The supreme court also dismissed the review petition filed by the telecom service providerson 16th January, 2020 and directed them to pay their outstanding dues before 23rd January, 2020. The companies jointly have to pay an amount of Rs. 1.47 Lakh crore. However the DoT has passed an order not to take coercive step against the companies in case they failed to comply with the Supreme Court order.
Key features:
1999 – The telecom service provider failed to pay the fixed licence fee and hence to bail out them the government introduced the New Telecom policy. As per the policy the telecom service provider has to pay a portion of their AGR to the government as fee as per the definition stated by the government
2003- The telecom service providers files a petition before the TDSAT challenging the definition of “Adjusted Gross Revenue” which requested the recommendations of TRAI
2006- TRAI submitted its recommendations and TDSAT ruled that the telecom service provider is required to pay only for the activities related to their licence.
2007- DoT files an appeal against the order of the TDSAT where the Supreme Court reversed the findings of the TDSAT.
2011- Against the order of the Supreme Court AUSPI files an appeal which was dismissed by the Supreme Court stating that the tribunal did not have jurisdiction to adjudicate on the definition of AGR.
2015- TDSAT allows all the applications filed by the telecom service providers challenging the basis on which the fees are charged by DoT. Against the said order DoT prefers an appeal before the Supreme Court.
2019 –The Supreme Court allows all the appeal filed by DoT directing the telecom Service provider to pay its dues.
2020- The review petition filed by the telecom service providers was dismissed upholding the decision of the Supreme Court. The telecom service providers are yet to pay their dues.
On 14th February, 2020 The Supreme Court in response to the order passed by the DoT issued show cause notice to the desk official stating why contempt proceedings should not be initiated against him. The court further ordered that the managing directors of the companies should be present in the next hearing i.e on 17th March, 2020 in case the companies failed to comply with the order of the Supreme Court directing the companies to clear its dues. Such being the case, the companies are likely to pay its dues on 17th February, 2020. On 17th February, 2020, the Vodafone approached the Supreme Court with a plea to extend the time for payment of its dues and further prayed the court not to take stringent action by enforcing the bank guarantees issued by it which was duly dismissed by the Supreme Court.
Edited by J. Madonna Jephi
Approved & Published – Sakshi Raje
