There seems to be no respite for the telecom operators Vodafone Idea and Bharti Airtel on the AGR (adjusted gross revenues) case. In response to the application filed by the central government proposing payment of AGR dues by telcos over 20 years considering the financial state of the sector, a bench headed by Justice Arun Mishra in the Supreme Court pulled up the DoT, telecom operators and media for trying to influence the court's October 24 order in which it has asked telcos to pay AGR dues.
The court reportedly said that telecom companies have usurped money and don't want to pay even a fraction of the revenues earned. "Are they more superior to us? Who is this gentleman who has allowed self-assessment," the court reportedly observed.
The court has also categorically denied self-assessment of the AGR dues by the telcos, and has asked companies to pay all four components of the dues: principal, interest on the principal, penalty, and interest on penalty. The court said that there can be no further exercise regarding dues payable. "Even telcos should not have any further litigation regarding dues payable," the court reportedly observed. The court, however, said that it would consider government's plea on payment time, at the next hearing in two weeks.
Given that the court has refused to go back on its previous order, it means that telcos will now have to pay the entire amount - that is Rs 1.46 lakh crore. "It's going to be a crisis situation for the telcos as SC has given them no breather on the AGR matter," says a telecom analyst. Though it's not clear as yet that whether the telcos have to deposit the remaining amount immediately or they can wait for till the court considers government's plea.
So far, Bharti Airtel has paid Rs 13,004 crore to the DoT (department of telecom) in two instalments, and it has also deposited additional Rs 5,000 crore to cover the difference in case there's discrepancy in its own assessment vis-a-vis DoT's calculations. As per the data provided by the telecom minister, Airtel and Telenor India (which was acquired by Airtel) together owe Rs 37,740.36 crore, and the court has now directed Airtel to pay the remainder of the amount (Rs 19,736.36 crore). Airtel sources said that the company has also submitted its self-assessment calculations with DoT.
So is the case with Vodafone Idea which has self-assessed its dues (just the principal amount) at Rs 6,854 crore, and paid the same to the DoT in three tranches. After today's order, Vodafone Idea will have to pay additional Rs 46,184.6 crore to the DoT - which is the difference between DoT's internal calculations (Rs 53,038.6 crore) and Vodafone's self assessed amount. Tata Tele too will have to pay Rs 11,625.92 crore to the DoT in addition to Rs 2,197.37 crore that it has already paid.
Telcos, however, say that the typical process of paying taxes is through self-assessment. In each of the circle, the telcos have been historically paying their dues to the circle officers on the basis of their self-assessment. That has been the norm for a long time, and now that the court has refused the self-assessment process on the AGR matter, the telcos and DoT are in a fix.
Some experts say that the telcos have been imprudent in their approach on the AGR case. "Their legal teams have not done the job properly. They should have challenged the DoT demand in the court instead of doing own assessment and depositing the amount," says a telecom expert.
Although the DoT's demand has been made from 15 operators, 71.5 per cent has to come from just three operators - Vodafone Idea, Airtel and Tata Teleservices. Many of the other penalised operators have already shut shop. The impact of the lost AGR case on telcos is so huge that Vodafone Idea filed the highest-ever quarterly loss in the corporate history - Rs 50,992 crore in the second quarter of 2019/20.