Info-tech

Here’s how SC ruling on Adjusted Gross Revenue will impact Airtel, Vodafone Idea

Our Bureau Mumbai | Updated on October 24, 2019

The definition of AGR has been a long standing issue between the DoT and the Telecom Service Providers (TSPs), in particular, on some items that the TSPs strongly believe should not be included while calculating AGR since these are not part of the core telecommunications services

The Supreme Court on Thursday upheld the Centre's decision on the definition of adjusted gross revenue. This will have major ramifications for incumbent operators Airtel and Vodafone Idea. 

What is AGR?

Telecom operators are required to pay licence fee and spectrum charges in the form of revenue share to the Government. The revenue amount used to calculate the revenue share is knows as AGR. While the Department of Telecom wants income earned by the operators from things such as bank deposits included as AGR, operators believe that the income earned from telecom services should be counted.

The definition of AGR has been a long standing issue between the DoT and the Telecom Service Providers (TSPs), in particular, on some items that the TSPs strongly believe should not be included while calculating AGR since these are not part of the core telecommunications services.

While the industry has paid already 85 per cent of the demand raised by the DoT, the remaining 15 per cent has stayed disputed for a long time with the TSPs getting favorable judgments in various legal forums, including TDSAT, High Courts and even Supreme Court.

The latest petition by the DoT is being heard in the Supreme Court, wherein the DoT is demanding interest, penalty and interest on penalty on the outstanding amount. These amount to ₹92,641 crore (disputed actual demand is ₹23,189 crore, levy of Interest of ₹41,650 crore, penalty of ₹10,923 crore and interest on penalty of ₹16,878 crore), something the industry has been disputing and believes that the demand is unjust given previous judgments, where the same was held in favour of the industry by TDSAT on two occasions (2007 and 2015). The Supreme Court in 2011 also remanded the matter back to the TDSAT for interpretation of the heads and computation thereof.

Since then there have been multiple appeals and verdicts by the DoT and the industry/TSPs in various forums including High Courts and the Supreme Court of India.

All the appeals against the TDSAT order dated April 23, 2015 (both Union and the operators) was heard before the Bench of Justice Arun Mishra, Justice S Abdul and Justice MR Shah. The Verdict was delivered today. 

Published on October 24, 2019

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