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SC: Agreement Clearly Defines Gross Revenue

The apex court had on October 24 allowed the Centre to recover around Rs 92,000 crore from telecom operators while dismissing their plea that adjusted gross revenue (AGR), on the basis of which fee is paid by them to the Centre, should include only core telecom services, excluding revenue from other sources. It had accepted the Centre’s contention that AGR should include dividends, handset sales, rent and profit from the sale of scrap, apart from revenue from services.

Initially, 15% AGR was fixed as licence fee under revenue sharing, which was reduced to 13% and finally to 8% in 2013. Almost all telecom operators — Airtel, Vodafone, Idea, RCom, Aircel, BSNL and MTNL — will feel the pinch of the apex court verdict.

“The definition of gross revenue is crystal clear in the agreement. How the adjusted gross revenue is to be arrived at is also evident. It cannot be submitted that the revenue has not been defined in the contract. Once the gross revenue is defined, one cannot depart from it and the very meaning is to be given to the revenue for the agreement,” the bench said, adjudicating the dispute between the Centre and telecom companies that has been going on since 2003. The court had said the companies had not only to pay licence fee but will have to shell out interest and penalty for delaying payment.

It had held that each and every source of revenue be part of AGR. It said discounts allowed on international roaming to consumers, commission and discount to distributors on sale of prepaid vouchers are also part of the gross revenue.

Refusing to grant any relief to the telecom companies to waive off penalty and interest, the court said, “No litigant can be permitted to reap fruits on such inconsistent and untenable stands and litigate for decades in several rounds which is not so uncommon but is disturbing scenario projected in very many cases.”―Times of India

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