Telecom operators face the possibility of paying out another ₹25,000 crore to the government with the Supreme Court set to give a final hearing to the dispute related to one-time spectrum charge (OTSC) today.
There have been 19 adjournments over the last four years. The matter will be heard by the bench headed by Justice MR Shah, who was part of the AGR bench then headed by Justice Arun Mishra.
The total OTSC liability on the operators is estimated to be ₹25,000 crore. Individually, Airtel and Vi have an exposure of ₹9,000 crore and ₹11,000 crore, respectively. RCOM and TTSL have OTSC liability to the extent of ₹2,000 crore and ₹1,800 crore, respectively.
Backgrounder. On Nov 5, 2020, the Supreme Court had refused to stay the TDSAT order that had quashed the department of telecommunications’ demand for one-time spectrum charge (OTSC) on spectrum allotted beyond start-up 4.4 MHz to up to the contracted limit of 6.2 MHz.
The TDSAT had also ruled that the government can charge OTSC only prospectively from January 1, 2013, (the date on which the government notified this decision) and that too only on administratively allocated airwaves beyond 6.2 MHz.
The DoT, in its appeal, has stated that the government’s policies in the fast changing telecom and technology sectors are adopted and tailored from time to time based upon the circumstances and these policies were sometime recommended by an independent and specialised regulatory body Trai after open house consultations with stakeholders.
After the TDSAT’s decision in 2019, the burden of OTSC for operators like Bharti Airtel and Vodafone Idea had come down by more than 60%.
DoT had levied the OTSC retrospectively from July 1, 2008, when a decision to this effect was taken by the government, and raised a total demand of around Rs 25,000 crore on nine telcos in 2013 for spectrum held beyond 6.2 MHz. Vodafone Idea had moved the tribunal against the government for raising a demand for Rs 3,599.4 crore as the OTSC.
The decision to levy OTSC was taken by the United Progressive Alliance government in the wake of the Supreme Court in February 2012 cancelling 122 telecom 2G licences given by the then telecom minister A Raja. While the SC cancelled the licences, it raised a furore as these were given at 2001 rates of Rs 1,658 crore.
The Union Cabinet then decided to charge for spectrum given to the operators beyond the contracted amount through administrative orders.
On why retrospective demand is unsustainable, the TDSAT had explained, “Keeping in view the requirement of natural justice, levy of any such demand has to be accompanied with an option to surrender the allotted spectrum. However, we notice that the demand notice is given in 2012 to be effective from 2008, but option to surrender is from 2012 and not from 2008. Exercising the choice of surrender with effect from 2008 actually will be an impossibility, since no notice for charging OTSC was given to the petitioner in 2008. Therefore, retrospectivity of demand in this case cannot be held to be sustainable. However, levy of such demand prospectively suffers no such infirmity”.