India’s No. 2 telco also sought permission for the telecom department to arrive at the final adjusted gross revenue due amounts of mobile phone operators after taking into account the calculations done by the companies.
“The Application accordingly seeks clarification/modification/recall of the said orders insofar as they (i) direct that the said amounts mentioned in the respondent’s statement be taken as the final amounts; and (ii) preclude the respondent from proceeding with and completing the departmental assessments and finalising the amounts due and payable,” Airtel said in its petition.
The ‘respondent’ here is the government (telecommunications department) and the said “mistaken” orders were passed on March 18, July 20 and September 1 last year.
The “errors” in DoT’s calculations of the dues stem from duplication in revenue addition, incorrect interest rate for calculating spectrum usage charges (SuC), and payments made by the telco not factored in, amongst others, Airtel said.
ET was the first to report on Airtel’s latest petition in the Supreme Court, in its January 6 edition.
In March 2020, while hearing a modification plea of the government which wanted the telcos to be allowed to pay their AGR dues over 20 years, the top court had scrapped any exercise of reassessment by the telcos; then in July, during the hearing of the modification plea, the court again said no to recalculations; and finally in September, it allowed the government’s plea of AGR payment in instalments, but over 10 years, and according to the dues calculated by DoT.
The “three mistaken orders cause tremendous prejudice to the rights of the applicants, inasmuch as they would have the effect of requiring the applicants to pay as dues, amounts which have not been duly assessed and which have a large number of computational / arithmetical errors,” Airtel said in the petition. “The applicants (Airtel) pray that the respondents be permitted to complete the process of assessments after considering the representations made by the applicants in this respect (including for the mathematical and calculation errors) and thereby determine the amounts due and payable.”
Airtel’s move – which is expected to be followed on similar lines by Vodafone Idea and Tata Teleservices – may lead to another legal tussle over an issue that had put a question mark over the viability of the two surviving telcos.
Tata Tele has exited the industry by selling its consumer mobility business to Airtel.
To be sure, the three-judge bench headed by Justice Arun Mishra, now retired, had rejected any move by the telcos to reassess the dues on their own.
In its plea, Airtel argued that while the top court had refused to allow any self- assessment of AGR dues by the telcos, it “was a clear mistake” not to allow DoT to demand dues without fixing an amount.
“…order directing the amounts stated in the respondent’s chart/statement to be treated as the “final amount” was a clear mistake of the court, inasmuch as the assessments of the dues had till then admittedly not been completed/finalised by the respondent,” Airtel argued, noting that the government’s annexed statement itself referred to the amounts due “as per preliminary assessments”, and “subject to further revisions due to departmental assessments”.
The telco highlighted the many instances in which there was a wrong assessment done by the government and “not corrected by recalling/modifying the above orders, tremendous prejudice will be caused to the applicant (Airtel)…”
The discrepancies specially become glaring from 2016 onwards, it said.
The telco, which according to its own estimates has to pay only Rs 13,004 crore in total AGR dues, pointed out that the impact of the “arithmetical errors” is significant.
“It is submitted that the impact of such errors results in significant increase in the amounts being claimed by the respondent, as for every Re 1 increase in the principal amount, the levy of interest, penalty and interest on penalty, results in the amount being claimed by the respondent increasing by up to Rs 8, depending on the year to which it pertains,” it said.
Airtel now owes the government almost Rs 26,000 crore more, and Vi has about Rs 50,400 crore in AGR dues to be paid in 10 equal annual instalments through March 31, 2031.
Total AGR demand, as per DoT’s calculations, is about Rs 44,000 crore for Airtel and Rs 58,400 crore for Vi. Airtel has so far paid over Rs 18,004 crore of its dues and Vi has paid Rs 7,854 crore.
DoT has estimated Tata Tele’s dues at Rs 16,798 crore, of which the company has paid Rs 2,197 crore so far.
For the two loss-making operators, Airtel and Vi, a reduction in their AGR dues is crucial since they need to buy spectrum in an auction slated for March and expand their 4G networks to take on market leader Reliance Jio, analysts said.
Airtel has raised $8 billion over the past year or so, and is better placed than Vi, which is struggling to match rivals operationally and losing subscribers.