Airtel, Vi eye over ₹24,000 crore relief as Bombay HC quashes govt's spectrum fee demand

In a relief for telecom operators Bharti Airtel and Vodafone Idea, the Bombay High Court on Monday quashed the government's demand notices seeking one time spectrum charges (OTSC) over the levy on spectrum held beyond 6.2 megahertz (MHz) from 2008 onwards.

In the 13-year legal battle, this ruling would potentially provide a total relief of over ₹24,000 crore to the companies. According to the fiscal year 2025 (FY25) annual report of Bharti Airtel, it had disclosed a contingent liability towards OTSC of ₹6,600 crore. Its total liability towards OTSC rose to ₹16,500 crore as of March end 2025, including the interest of ₹9,954 crore.

Vodafone Idea's exposure was at ₹7,581 crore, as per its FY25 annual report. It was not clear whether the amount includes the interest. The amount could increase based on the interest calculations.

"This ruling marks an important milestone for India's telecom sector by eliminating legal and financial uncertainty and creating a more supportive environment for future investments," said an Airtel spokesperson, welcoming the ruling.

Vodafone Idea did not respond to Mint's queries until press time.

While the Bombay High Court has now quashed the demands against Airtel and Vodafone Idea, the broader legal battle over OTSC remains pending before the Supreme Court through multiple parallel proceedings.

A division bench of Justices Manish Pitale and Shreeram V. Shirsat allowed petitions filed by the telecom operators and set aside the Centre's decisions of November and December 2012, along with the consequential demand notices issued to the companies. The court directed that bank guarantees furnished by the operators in connection with the disputed demands be returned. It also quashed all consequential actions taken by authorities.

“We have come to a conclusion that the petitioners have been able to make out a case in their favour seeking quashing and setting aside of the impugned decisions and consequent demand notices,” the court said while allowing the petitions. "The respondent has not been able to justify the said decisions and its action of levying one-time spectrum charge retrospectively upon the petitioners."

The dispute dates back to 2012, when the Union government decided to levy a one-time charge on spectrum holdings beyond the prescribed threshold. The Department of Telecommunications (DoT) subsequently raised demands on existing telecom operators for spectrum held beyond 6.2MHz with retrospective effect from July 2008.

Airtel and Vodafone Idea challenged the move before the Bombay High Court in 2013, arguing that they had already paid the applicable licence fees, entry fees and spectrum usage charges under their licence agreements and that the government lacked the authority to retrospectively impose an additional levy years after spectrum allocation.

The High Court had granted interim protection to the operators in January 2013, restraining the government from taking coercive action during the pendency of the matter.

In its judgment, the court observed that telecom operators had already been paying licence fees and spectrum usage charges under the existing regime and that the government failed to establish a contractual or statutory basis for introducing an additional retrospective charge for spectrum that had already been assigned.

Rejecting the Centre's argument that spectrum, being a scarce natural resource, justified the levy, the court held that while the government holds spectrum in public trust, it remains bound by the terms and conditions of licences granted to operators. The bench noted that the state cannot retrospectively alter contractual financial obligations without clear authority under law.

The judgment also traced the evolution of India's telecom licensing framework. It noted that under the National Telecom Policy, 1999, operators migrated from a fixed licence fee regime to a revenue-sharing model and continued to pay enhanced spectrum usage charges whenever additional spectrum was allocated. It found that the policy framework did not support the retrospective imposition of OTSC on spectrum holdings up to 10MHz, which formed the core of the dispute.

In July 2019, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruled that OTSC could be levied prospectively, but not retrospectively. The DoT challenged the ruling before the Supreme Court, where the matter is still pending.

Separately, Aircel Cellular challenged a 2016 Madras High Court judgment that upheld DoT's demand for payment of OTSC of about ₹3,273 crore. The appeal is also pending before the apex court.

The DoT can also challenge Bombay High Court's ruling before the Supreme Court, which may have the final say on the issue, legal experts said.

The ruling comes at a crucial time for Vodafone Idea, which recently received a significant relief from the government on its adjusted gross revenue (AGR) dues. On 31 December, the government froze its AGR dues at ₹87,695. Later in April, it slashed the cash-strapped telecom firm’s AGR dues by ₹23,600 crore to ₹64,046 crore after recalculation, deferring the bulk of its payments by 10 years, to be paid from FY36 to FY41.