SC slams Centre on AGR demand against PSUS

Asks Bharti, Voda Idea to submit affidavit in five days, detailing the road map for paying remaining dues

The Supreme Court on Thursday questioned the Centre’s move to ask state-owned firms to pay ~2.7 trillion as dues linked to adjusted gross revenue (AGR), calling it “wholly and totally impermissible’’. Seeking an explanation from the Department of Telecommunications (DOT) on the matter, a Bench of Justices Arun Mishra, S Abdul Nazeer and M R Shah said the court’s AGR verdict of October 2019 was misinterpreted as it was silent on dues to be raised from public sector undertakings (PSUS).

In a relief to P SUS including Oil India, GAIL , and Power Grid Corporation, the apex court said the DOT must consider withdrawing its demand. PSUS had been asked to pay licence fee and spectrum usage charge dues not only on their telecom-related revenues but on the total revenues, following the October 24, 2019, Supreme Court order.

The Bench, headed by Justice Mishra, in a virtual hearing, also asked private telecom operators such as Bharti Airtel and Vodafone Idea to file affidavits within five days outlining details on how they would pay the AGR dues. Earlier, in its petition to the SC, DOT had sought relief via 20-year staggered payment for the telcos' dues along with a waiver of interest and penalty.

Financially stressed telco Vodafone Idea told the court that it would not be able to file the affidavit in such a short time because the dues were huge. According to the telco, it does not even have enough money to pay salaries to employees and meet expenses. It also pointed out it would not be in a position to give any bank guarantee. On March 6, the company had pegged its total dues to the government at ~21,533 crore, while the DOT estimated it at over ~53,000 crore. The company has made a part payment of its dues.

The total Agr-linked amount for telecom and nontelecom companies was pegged at around ~4 trillion. The court will hear the matter again on June 18.

Solicitor General Tushar Mehta, counsel for DOT, told the Bench that the Centre will file an affidavit explaining why the AGR demands were raised against PSUS.

The DOT had sought ~1.83 trillion from GAIL and ~48,489 crore from OIL by including their revenues from oil and gas business in calculating dues for leasing out surplus bandwidth capacity to third parties. Powergrid was asked to pay ~21,954-crore, while Gujarat Narmada Valley Fertilizers & Chemicals faced ~15,020-crore demand. Railtel and Delhi Metro, too, faced similar demands.

On March 4, the court had detached the PSUS from the AGR judgment dated October 24, 2019, and directed them to seek relief from an appropriate forum.

When telcos sought more time to make the balance AGR payments saying the government could cancel their telecom licences if they failed to do so, the SC said, “Can’t allow extension based on a “gentleman’s promise”. How can 20 years be said to be reasonable?” The top court had in October 2019 upheld Dot's definition of AGR, ending the 14-year-old legal battle between telcos and the government.