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This article is more than 3 month old.

Supreme Court dismisses pleas by Vodafone-Idea, Bharti Airtel for recalculation of AGR dues

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AGR Dues case: The apex court has dismissed Vodafone-Idea and Bharti Airtel's plea seeking recalculation of the AGR dues. In January 2021, the companies had reached out to the court, claiming mathematical errors in the calculation of AGR dues.

Supreme Court dismisses pleas by Vodafone-Idea, Bharti Airtel for recalculation of AGR dues
The Supreme Court on Friday dismissed the pleas of Vodafone-Idea and Bharti Airtel for the recalculation of the adjusted gross revenue (AGR) dues demanded by the Department of Telecommunication (DoT).
The companies, hoping to reduce their dues, had argued DoT made arithmetical errors while calculating the AGR dues. They were seeking the apex court's directions to correct the errors.
AGR is a fee-sharing mechanism between the government and the telcos who shifted to the 'revenue-sharing fee' model in 1999. Earlier, they used to work on the 'fixed license fee' model. In this course, telcos are supposed to share a percentage of AGR with the government.
They have to pay DoT nearly 3-5 percent of AGR in usage charges for airwaves and 8 percent as license fees.
But the definition of AGRs has been long disputed. While companies say AGR should comprise just revenue accrued from core services, the government wants to include all revenue (including revenue from rent, land sales, etc.).
Vodafone-Idea (VI) has dues of Rs 1.8 lakh crores and in the plea to the SC, it claimed it is "about to go under". Bharti Airtel, on the other hand, had claimed duplication, disallowed deductions, and unaccounted payments.
However, the Solicitor General had informed the court that the Department of Telecommunications (DOT) has not shared any instructions on allowing the correction of errors.
"This was expected, but still disappointing in the sense that when there are computational errors with self-evidence, I would have thought that maybe the Supreme Court would have given it another look," Meet Malhotra, Senior Advocate said.
The shares of both the telecom companies dropped after the verdict. VI's shares slid 9.7 percent to hit their lowest level since October and were set for their worst day in almost a year. Bharti Airtel fell 2.6 percent.
Last September, SC had ordered the telecom companies to pay their dues. It had granted ten years to Bharti Airtel, Vodafone Idea, and Tata Teleservices to pay the dues to DoT.  The companies were to pay 10 percent of their dues by March 31, 2021.
"The point is that all these errors must have existed right from the beginning, the DoT may have known of them, telecom companies must have known of them. If they did not point out to the Supreme Court much earlier on then, the case was yet at large before the court," Senior advocate Sanjay Hegde said. 
In January 2021, Bharti Airtel and VI had moved to SC seeking directions to recalculate the AGR dues. The companies had said their calculations have arithmetic errors. But the SC had pronounced that telcos cannot raise disputes and cannot ask for re-assessment.
"Everything that you might be able to argue, you ought to argue at the first stage, you can’t hold back things and come back later and keep asking for a re-writing of a judgement," Hegde said.
The verdict by the SC bench, headed by Justice LN Rao, was slated to be pronounced on Thursday but it was cancelled at the last hour.  Previously on three occasions, SC had observed that AGR demand can't be recomputed.
"I think the Supreme Court has more than enough, this may not prevent other administrative or legislative measures but you can’t expect the Supreme Court to keep re-write its judgement," Hegde added. 
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