Tribunal order on spectrum dues: Telecom dept says its reconsidering appeal

The department of telecommunications (DoT) told the Supreme Court on Tuesday it is reconsidering its decision to proceed with an appeal filed against a tribunal order in April 2019 on the issue of recovery of one-time spectrum user charges (SUC) from companies to the tune of Rs 40,000 crore.

It requested the court to give the government four weeks so that it can take an “informed decision” whether to proceed with its appeal against an order by Telecom Disputes Settlement and Appellate Tribunal.

The move is significant, as there are pending cases between telecom companies (telcos) and the government in various courts involving substantial amount of financial dues. According to sources, the number of cases go to over 200 in the Supreme Court itself. A DoT study done a few years ago said the total number of cases is as high as 2,800. These apart from the big ones include other financial demands made by DoT and challenged by telcos, disputes on interpretation of the notifications and the law and appeals reversing a decision of a lower court.

DoT, in an affidavit before the Supreme Court, said that it has taken a decision to review, considering the sector’s financial crises. It pointed out that despite government measures most operators are making financial losses. It told the court that the cabinet in September cleared a telecom package to ensure viability of companies and prevent a monopolistic situation in the sector.

Officials who have worked in the department say that earlier no attempt was made by them to redress the issues through an out-of-court settlement mechanism. Lawyers involved in the cases say that the department’s approach was adversarial. Shifting from its stance, DoT is now considering utilising scheme akin to “Vivad Se Vishwas” for resolving tax cases to reduce litigation. That move many say could be a fundamental change in resolving this growing contentious issue.

The matter came to a head with the Supreme Court imposing directing telecom companies to pay past AGR dues with interest as well as penalty on interest. That decision virtually crippled many telecom companies.

After the Supreme Court cancelled 2G spectrum licences, the DoT post 2012 sent notices to operators demanding charges for spectrum allocated under administrative pricing. It had two components-one introspective demand from 2008-12 for any spectrum held beyond 6.2 MHz and two prospective demand from 2013 to the expiry of spectrum beyond 4.4 MHz.

The TDSAT, in July 2019, cancelled retrospective demand claimed by DoT. However, it allowed DoT to levy one-time spectrum charges beyond 6.2 Mhz on a prospective basis. Subsequently SC put a stay on the order.

According to analysts in the case of Bharti Airtel the total demand was around Rs 79 billion without interest, penalties and interest on penalties. Bharti has they say recorded one time spectrum charges of Rs 18 billion and Rs 38 billion interest on it in FY 21.

In the case of Vodafone Idea Ltd the demand was of Rs 68 billion without interest, penalty and interest on penalty say analysts.