Reiterating its stand on the payment of adjusted gross revenue (AGR) dues by telecom companies, the Supreme Court on Tuesday said no “technicality” would come in the way of enforcing the recovery of levies.
The court observed telcos could not treat spectrum dues as operational dues because airwaves were the basis of operations. Under the revenue sharing regime currently in place, spectrum dues cannot be dealt as operational dues.
Harish Salve, senior advocate appearing for Reliance Jio, clarified that the company had paid the AGR dues, including those derived from revenue earned by use of shared spectrum of RCom. In addition, it has paid 0.5 per cent extra SUC for sharing the spectrum as per Department of Telecommunications’ guidelines. He also said Jio had paid Rs 195 crore based on SC judgment in AGR case.
The apex court had sought spectrum sharing details of all the bankrupt entities and observed that Jio had been using RCom spectrum for the past four years and was liable to pay the AGR dues.
Justice Arun Mishra said the SC cannot allow AGR payments to be made in 20 years as they may go bankrupt in these many years.
This observation casts a shadow on Vodafone Idea’s operations as the company has time and again pleaded that it was not in a position to pay the dues and may even stare at folding operations.
“With the issue of the timeline for AGR payment still undecided, the future of the going concern is largely undetermined. If the apex court decides on a 10-year repayment tenure, it would pose as a grave challenge for the debt-ridden Vodafone Idea,” Sonam Chandwani, managing partner at KS Legal & Associates said.
If the Supreme Court decides on a 15-year repayment schedule, Vodafone Idea will experience some challenges but that will surely be less. With the two-year moratorium period in spectrum payments, Vodafone Idea could stay afloat if tariffs increase and divestments succeed, however, this may be a challenge due to the pace at which the company lost its customers in the past few quarters, she said.
The next hearing in the matter has been adjourned till August 19.
On August 14, the Supreme Court had sought details of the telecom operators using the airwaves allotted to the now bankrupt companies, including Aircel and RCom.
It directed the Union government, Reliance Jio, and RComm’s resolution professionals to produce documents to ascertain the AGR liabilities of RCom.
On August 10, the court had said the Union government should prepare a plan to recover AGR dues from bankrupt telecom operators, including RCom.
According to the DoT’s calculations, Bharti Airtel owes the exchequer Rs 43,780 crore, of which the company has paid Rs 18,004 crore.
Vodafone Idea has paid Rs 7,854 crore of its Rs 50,399 crore dues. Tata Teleservices has paid about Rs 4,197 crore and the balance is about Rs 12,601 crore.
The DoT has evaluated a liability of Rs 25,194.58 crore for Reliance Communications as of March 6, 2020.