Supreme Court gives Telecom companies 10 year time to clear AGR
The Supreme Court, while hearing on Tuesday in the Adjusted Gross Revenue (AGR) case, has given huge relief to the telecom companies. The court has given the companies 10 years to repay the AGR dues. Vodafone Idea and Airtel are quite relieved by this decision. This time has been given to the telecom companies with some conditions to repay the arrears.
The apex court also directed the telecom companies to repay 10 percent of AGR arrears by 31 March 2021 on Tuesday. A bench headed by Justice Arun Mishra said that the telecom department has demanded the dues of AGR and the decision given by the Supreme Court on this is final.
The bench has directed the managing directors or CEOs of telecom companies to give pledges or personal guarantees about payment of arrears in four weeks. The court has warned telecom companies that in case of default in payment of installment of AGR dues, they will be fined and charged interest. It would also be a contempt of court.
The court said that the National Company Law Tribunal (NCLT) would decide on the issue of sale of spectrum by telecom companies going through the insolvency process. The court has given this decision on other issues including the deadline for payment of arrears of Rs 1.6 lakh crore.
Significantly, the apex court had said that this decision will be taken on three grounds. First, whether or not telecom companies should be allowed to pay in pieces to pay AGR dues. Second, how to recover the dues of companies facing insolvency process. Third, is it legitimate for such companies to sell their spectrum.
Vodafone Idea and Bharti Airtel had sought 15 years time from the court to pay the AGR dues. So far 15 telecom companies have paid only Rs 30,254 crore, while the total outstanding amount is Rs 1.69 lakh crore.
What is AGR?
Telecom companies have to pay three per cent spectrum fee of AGR and eight per cent license fee to the government. The companies calculated the AGR based on the 2015 decision of the Telecom Tribunal. The tribunal had said at the time that the AGR would be excluding revenue from non-core sources such as rent, profit from sale of permanent property, dividend and interest. Whereas the Department of Telecommunications considers rent, profit from sale of permanent property and the amount received from sale of junk in AGR. It is on this basis that they are demanding outstanding fees from companies.
