The Supreme Court on Tuesday admitted the government’s appeal against the telecom tribunal’s order that asked it to maintain parity between Unified Licence Internet Service Providers (ISPs) and old licensees on licence fee issue.
If we compare on yearly basis, the AGR of telecom industry increased by 22.41%. The AGR of the industry stood at Rs 37,338 crore in July-September 2019 period.
The Supreme Court on Tuesday admitted the government’s appeal against the telecom tribunal’s order that asked it to maintain parity between Unified Licence Internet Service Providers (ISPs) and old licensees on licence fee issue. A Bench led by Justice DY Chandrachud while posting the matter for final disposal in April stayed the refund of licence fee to some ISPs in pursuance of TDSAT order. The TDSAT on October 28, 2019, while setting aside the licence fee altogether had ordered that the UL-ISP shall be assessed in the same way as the ISPs holding licences under the old regime.
It said it was unfair to waive fees for old licensees for internet service ie. not requiring them to pay Adjusted Gross Revenue at 8% (till the time the old licences survive), while requiring the same to be done for new licences. The tribunal further held that the requirement to consult the Trai was necessary and the fact that the regulator at the relevant time in 2012 did not specifically recommend inclusion of internet service in the scope of AGR, the central government was restrained from including internet services in the AGR.
The government, in its appeal before the top court, claimed that, “the telecom service providers have effectively succeeded at approbating and reprobating by enjoying the benefits of the new unified regime and paying for the old regime. This is apart from being a lavish waste of the spectrum resources (when internet services have become highly lucrative), results in an unfair position and a revenue loss of over Rs 4,000 crore to the exchequer.”
Denying there being “two regimes”, Solicitor General Tushar Mehta told the Bench, “the decision (tribunal) merely results in a change in policy. There are no ‘dual regulations’ or any sort of classification resulting in any arbitrariness. In fact, in order to maintain parity, and in order to not trample upon the vested right under the old licences wherein the entrants entered the contracts on the ground that no licence fee would be changed for internet services, the mechanism of a graded implementation was adopted.”
Mehta said as per the impugned policy, all new contracts would be 8% AGR, including internet services and all old licences, as and when they expired, would have to automatically shift to the new regime. “The entire debate on “new regime” and “old regime” is merely a device to not pay the requisite dues whilst taking the advantage of change in policy,” the government said.
In 2006, the licence fee was charged on revenue share basis. Then the revenue earned from “pure internet services” was to be excluded from gross revenue to arrive at AGR. This changed in 2013 when even pure ISPs had to pay a percentage of their revenue as licence fee. The DoT’s circular of June 29, 2012, for enhancing the licence fee rates from 6% to 8% was quashed by the TDSAT in October 2012 on the grounds that the department could not have taken such a decision provisionally without following due procedure under the Trai Act. Later, when the UL regime was introduced in August 2013, many TSPs, who obtained UL ISP licence afresh or through renewal, approached the TDSAT alleging non-level playing field between pre-UL and UL.