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Friday 5 June 2020

Supreme Court says ‘better to leave India’ due to delay in AGR payment

The telecom tribunal had stated before the October verdict of the Supreme Court that the adjusted gross revenue would exclude non-core resources such as rent, profit on the sale of permanent property, dividend and interest, most of which the government later included in the charge



One of the most successful sectors of the economy due to open competition between the players reducing tariffs to the lowest in the world, a boon for consumers, received a jolt today when the Supreme Court expressed displeasure over the attitude of the telecom companies and the Department of Telecommunication of the union government for the lack of progress in the Rs 1.47 lakh-crore Adjusted Gross Revenue (AGR) case. Despite the October order of the apex court, most companies have not deposited the arrears.

The highest court asked the companies why contempt action should not be initiated against them.

The Supreme Court said, “It appears the way in which things are happening, they have scant respect for the directions issued by this court.”

Hearing a bunch of petitions in the case, Justice Arun Mishra said he was “literally shocked”. He said, “This is nothing but a device to oblige the companies.” The court was reacting to a letter written to the attorney general and other officers in constitutional posts, where a revenue officer in the Department of Telecommunication had said no action should be taken against the telecom companies until the next order of the Supreme Court even if the AGR arrears are not paid by that time.

The judge became so frustrated at what looked like the soft corner of the government for the telecom companies, he said, “It is better not to live in this country and rather leave the country.”

The Supreme Court wondered when it had already ordered the telecom companies to pay, how a desk officer could issue such an order. The court wondered whether there was any law left in the country. If an officer could offend the court, the Supreme Court should be shut down, the judge said.

“We draw contempt against companies. Let the desk officer also explain why appropriate action should not be taken and he should be present on the next date of hearing. Please ask the desk officer to withdraw that dot order or he will go behind the bars by evening. We have to take action against him. The officer should understand where they should stop. It is clear contempt,” the court said.

The AGR verdict

The Supreme Court had ordered on 24 October that the telecom companies deposit the dues by 23 January. The companies had appealed for a review of the decision, which the Supreme Court rejected.

After this, Bharti Airtel, Vodafone-Idea and Tata Teleservices appealed to set a new schedule, demanding more time for payment. The Supreme Court on Friday rejected that plea as well.

Of the telecom companies that owed Rs 1.47 lakh crore as spectrum and license fees based on AGR, Reliance Jio alone paid about Rs 195 crore.

A bench of Justice Arun Mishra has asked the managing directors of Bharti Airtel, Vodafone, MTNL, BSNL, Reliance Communications, Tata Telecommunications and others to appear on 17 March.

After the rap from the Supreme Court, the department of telecommunications has asked all telecom companies to repay AGR dues by the end of Friday in order to comply with the October judgment. “You are hereby directed to make the payment of outstanding dues of licence fee and spectrum usage charges by 11:59 PM of 14 February positively,” the DoT letter issued today said.

Bharti Airtel now says it will pay Rs 10,000 crore by 20 February. The government has withdrawn the 23 January order by the desk officer that said it would not take coercive action against mobile service providers.

The AGR dispute

There was a dispute between the telecom companies and the government over AGR for the last 14 years. The Telecom Tribunal in 2015 gave a ruling in favour of the telecom companies before the Supreme Court’s judgment. The tribunal had stated that, excluding non-core resources such as rent, profit on the sale of permanent property, dividend and interest, the rest would be included in the AGR.

Foreign currency exchange (forex) adjustment was included in the AGR. However, bad debts, foreign exchange fluctuations and junk sales were kept out of it.

The dispute arose because the government included rent, profit on selling permanent property and the amount received from selling junk in the AGR.

In the judgment of 24 October 2019, the Supreme Court had considered the government’s calculations to be correct. The telecom companies were ordered to pay the outstanding fees including interest and penalty on the same basis.

In response, the telecom companies raised tariffs to meet the cost, and yet struggled to comply with the court order.

Companies are required to pay 3% of AGR as the spectrum fee and 8% as the licence fee to the government.


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