Telecoms pay a percentage of their revenues as license fee to government
The Supreme Court today sharply rebuked the Department of Telecommunications (DoT) for demanding Rs 4 lakh crore from state-run firms and accused it of misusing an earlier judgment. "This is wholly and totally impermissible," the court said, referring to what the government's telecom department has demanded from Public Sector Units (PSUs) like Oil India, Delhi Metro Rail Corporation and Power Grid Corporation. The court warned of contempt proceedings against officers involved in the move and asked the government to reconsider within three days charging dues from the state-run companies. The judges also agreed to consider a government plan designed to rescue mobile-phone service providers, with riders, and asked the telecom operators to come up with a roadmap for payment of dues.
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Questioning the telecom department on how telecom demands were made of state-run companies, a three-judge bench said: "This is an outright misuse of our verdict. You are making a demand of over (Rs) 4 lakh crores."
As the court asked for an affidavit from DoT officers how they demanded money from PSUs, the judges said: "We will punish them! We will punish them!"
The Supreme Court sought the government's response on what guarantees the court can seek to ensure telecom companies abide by a timeframe and payment schedule.
Prime Minister Narendra Modi's government had sought approval for several telecommunications firms, including Vodafone Idea, to pay combined back-fees worth Rs 1.4 lakh crore ($19 billion) over 20 years.
Solicitor General Tushar Mehta, appearing for the telecom department, said the government has come out with a bailout plan. "It would be difficult for the companies to pay the amount in one go. If the court objects, it will adversely impact the telecom sector, affect network, and the consumers will ultimately suffer," he said.
Mr Mehta said the government will file an affidavit on why dues were raised against public sector enterprises, to which the court responded by directing the government to reconsider their demands from the companies.
On whether telecom companies should be allowed these to pay dues in a staggered fashion over 20 years, the bench responded: "Who has seen 20 years in the future?"
The dispute centers around the definition of adjusted gross revenue (AGR). Telecoms pay a percentage of their revenues as license fee to government. They argue that non-core business like rent or income from sale of handsets or roaming charges should not be included in the revenue of which they pay a percentage - they want to pay only on revenue earned from their core business. The court did not agree.
In October last year, the Supreme Court had allowed the telecom department to recover adjusted gross revenue-related dues worth Rs 92,000 crore from telecom companies. Following the court's order, the telecom department had sought a cumulative Rs 2.7 lakh crore from GAIL India and other non-telecom PSUs.
State-owned firms including GAIL and Oil India challenged the demand, arguing that they did not owe any dues as the court judgement did not apply to them. The government argued today that these firms held the telecom spectrum.
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