Supreme Court grants relief to Telecom Companies

The SC has granted a reprieve to telecom companies by allowing the payment of AGR (Adjusted Gross Revenue) dues by 2031. The decision comes as a great relief to telecom companies, like Vodafone-Idea, which has reported its eighth consecutive quarterly loss in the three months to June. A total of Rs. 1.43 lakh crore in combined dues is to be paid to the government by the companies. The repayment period is short of the original 15-20 years sought by the companies. While handing down the judgement, the bench headed by J. Arun Mishra asked the CEOs or the Managing Directors of the Companies to furnish undertakings or personal guarantees within four weeks for payment of dues. As per the ruling, the telecom operators are required to make a payment of 10% of the dues demanded by DOT by March 31, 2021, in the first instance. The dues are to be completed in the form of yearly instalments starting from April 1, 2021, up to March 31, 2031, in succession of each financial year.

The case originates from a claim by the DOT that the companies had underreported their revenues, ending up paying reduced amounts for spectrum allocation. The Apex Court had allowed the government to recover its dues from telecom companies accepting the definition of ADR as provided by the government last year. The ADR was interpreted to include the companies’ income from revenue lines, which are not central to the main business carried out by them. A majority of the companies failed to comply with the deadline set by the SC in the earlier judgement.

The court also ordered that on default in the payment of annual instalments, the companies will be liable furnish penalty and interest on penalty automatically without reference to the court. Besides this, the defaulters will also become liable for contempt of court.

Credit: Swati goyal

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