BackNon-telecom firms hit by top court’s ruling on AGR
Firms told to pay up over ₹2 tn in pending dues, interest under new AGR definitionTelcos Bharti Airtel and Vodafone Idea move the top court
PremiumNEW DELHI : Last year’s Supreme Court order defining telecom revenue has landed a number of non-telecom companies in a soup, with the government asking them to cough up more than ₹2 trillion in pending dues and interest.
India levies licence fees of 8% of adjusted gross revenues (AGR) from every telecom licence holder. Ending a 14-year battle between telcos and the department of telecommunications (DoT), the apex court on 24 October defined AGR as all revenues of a licence holder and not just revenues from telecom services. The order dealt a body blow to telcos and also made non-telecom companies holding licences for internal communications and signalling liable to pay licence fees on their entire revenue, even if do not offer telecom services.
DoT has sought ₹1.72 trillion from GAIL (India) Ltd, ₹22,168 crore from Power Grid Corp of India Ltd, ₹15,019 crore from Gujarat Narmada Valley Fertilisers and Chemicals Ltd and ₹290 crore from RailTel Corp. of India Ltd by 24 January.
“The Supreme Court verdict is an interpretation of the licence agreement and hence applies universally to all companies holding a telecom licence. DoT is simply enforcing the court order by raising these demands," said Harsh Walia, partner (technology, media and telecommunications) at corporate law firm Khaitan & Co.
Telecom operators Bharti Airtel Ltd and Vodafone Idea Ltd, which together owe ₹90,00 crore, on Wednesday moved the top court seeking an open court hearing of their review petition.
“As notices were never issued to such non-telcos, they may prefer to contest the demand for dues, including whether such demand is time-barred and they should file clarification pleas before the Supreme Court. They could also approach the Telecom Disputes Settlement and Appellate Tribunal for a stay and seek that no coercive action should take place for non-payment of dues," said Saurav Kumar, partner, IndusLaw.
Gujarat Narmada Valley Fertilisers and Chemicals wrote to stock exchanges on 1 January that it was seeking legal advice on DoT’s demand notice and the judgement. The company holds VSAT and ISP licences. RailTel on 4 January filed a petition in the Supreme Court seeking a modification or a clarification on its order.
GAIL (India), however, maintains that it is not liable to pay. “GAIL (India) Ltd obtained ISP licence in 2002 for 15 years, which expired in the year 2017. As no business was done under ISP licence, there is no amount payable," a company spokesperson said.
Telecom minister Ravi Shankar Prasad had said in the Lok Sabha on 4 December that the ratio of the judgement will be applicable on all. “As the ratio of the Supreme Court judgement is applicable on all licences of DoT, the ruling may have an impact on the profits of these companies," he said.
Emails sent to PowerGrid, ONGC, AAI, DMRC, RailTel remained unanswered till press time.
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