SC terms telcos’ objections on AGR frivolous

By Sumit Saxena

New Delhi, Oct 24 (SocialNews.XYZ) In a blow to telecom operators, the Supreme Court said their objections to the definition of adjusted gross revenue (AGR) was "frivolous in nature".

The Bench, headed by Justice Arun Mishra, said, "Even as per the case of licensees they were not validly included in definition. Now reprobating that, stand has been taken they didn't form part of revenue, which is not permissible. No litigant can be permitted to reap fruits on such inconsistent and untenable stands and litigate for decades."

The apex court on Thursday ordered telecom carriers, including Bharti Airtel and Vodafone Idea, to pay the government Rs 92,000 crore in dues that included penalties and interest.

The court reprimanded the telecom operators for raising untenable objections and taking inconsistent stands. "Earlier, they had questioned on the ground that these items were wrongly included in the definition. Now they are contending that the same are not part of the definition in agreement", the court said.

The gross revenue is inclusive of installation charges, late fees, sale proceeds of handsets (or any other terminal and equipment), revenue on account of interest, dividend, value-added services, supplementary services, access or interconnection charges, roaming charges, revenue from permissible sharing of infrastructure and any other miscellaneous revenue, without any set-off for related item of expense.

Deducing the AGR, some aspects were excluded from the gross revenue, which are access charges actually paid to other eligible/entitled telecommunication service providers within India, roaming revenues actually passed on to other eligible/entitled telecom service providers, and service tax on service and sales tax actually paid to the government if gross revenue was included as a component.

According to the telecom operators, the department had illegally included various elements of income in the definition of AGR, which don't accrue from the operations under the licence like dividend income, and interest income on short-term investment, discounts on calls, revenues from other activities separately licensed, reimbursements under the Universal Service Fund.

Justifying interest and penalty on operators, the court said it couldn't modify the same. "The very definition of gross revenue whereas parties have fully understood the meaning and the regime of revenue sharing was highly beneficial, and they have earned revenue and failed to share the same as compared to fixed fee regime," the court observed.

The court said, since 2003 the definition of gross revenue was clear. It is apparent from the correspondence and the agreement reached between the parties, which established the composition of gross revenue.

"Licensees were aware that these items concerning which they have raised the dispute were included in the definition of gross revenue, as such, they had initially questioned inclusion on the basis of the validity of the definition of gross revenue", said the court.

(Sumit Saxena can be contacted at sumit.s@ians.in)

Source: IANS