The Supreme Court on Friday sought responses from Bharti Airtel and Vodafone Idea on the Centre’s appeal against the Bombay High Court verdict striking down the retrospective levy of one-time spectrum charges (OTSC). The levy, the demand for which was first raised in 2013, runs into about `22,000 crore across the industry, including Rs 3,300 crore in bank guarantees.
A Bench of Justices B V Nagarathna and R Mahadevan issued notices to the telcos and indicated that it would decide at the next hearing whether the appeal should be heard along with a pending matter arising from the Madras High Court’s ruling in the Aircel case.
Arguing for the Centre, Additional Solicitor General Vikramjit Banerjee contended that spectrum is a public resource and that telecom operators should pay its market value. The Centre also opposed the release of bank guarantees furnished by the companies, stating that the dispute involved more than Rs 3,300 crore of public money.
Counsel for the telecom operators countered that companies could not be subjected to fresh financial liabilities years after spectrum had been allotted and payments made under the prevailing licensing framework, stressing the need for certainty in commercial arrangements.
Lawyers representing the Centre also urged the apex court to consider the present appeal along with the Aircel matter, pointing to the conflicting conclusions reached by the two high courts on the same issue. Senior advocates Mukul Rohatgi and Balbir Singh appeared for Vodafone Idea, while senior advocate Shyam Divan represented Bharti Airtel.
The Centre’s appeal in the apex court arises from the Bombay High Court’s June 8 ruling. The court quashed the Department of Telecommunications’ decision to retrospectively levy OTSC on spectrum holdings beyond 6.2 MHz and set aside demand notices issued to Bharti Airtel and Vodafone Idea. The case involved industry-wide levies of about `22,000 crore.
The Bombay High Court held that the government lacked both statutory and contractual authority to impose an additional financial obligation years after spectrum had already been assigned under existing licence agreements. It also directed the government to return the bank guarantees furnished by the telecom operators against the disputed demands.
The dispute dates to a 2012 Union Cabinet decision under which existing telecom operators were required to pay a one-time charge for spectrum holdings beyond specified thresholds, including a retrospective levy on spectrum held above 6.2 MHz from July 2008 onwards.
The Department of Telecommunications subsequently raised demand notices in 2013, leading to litigation by several operators. The Bombay High Court held that operators had already paid for spectrum under the revenue-sharing regime introduced through the National Telecom Policy, 1999, and that the government could not subsequently alter the financial terms of those licence arrangements. The ruling directly contradicted an earlier Madras High Court judgment in the Aircel case, which upheld the levy, leaving the Supreme Court to resolve the conflicting legal interpretations.