Vodafone Idea Ltd. and Bharti Airtel Ltd. have approached the Supreme Court to seek a limited reconsideration of the judgment that mandated Indian telecom operators to include non-core revenues in calculating their adjusted gross revenue (AGR).
The AGR serves as the basis for a revenue-sharing mechanism between telecom operators and the government, determining the licensing fee and spectrum usage fee payable to the Department of Telecommunications.
The dispute over the definition of AGR dates back to 2005, with telecom operators arguing for the inclusion of only core revenues and the DoT insisting on including all revenues, including non-telecom services.
In October 2019, the Supreme Court ruled in favor of including non-core revenue in the AGR calculation, concluding a 14-year legal battle between mobile operators and the government.
Vodafone Idea’s plea highlights two key issues causing manifest injustice. Firstly, it argues that the court erred in holding that the DoT’s AGR demand would be final, even in the presence of arithmetical errors in the calculation, leading to unjust enrichment.
Secondly, the plea contests the court’s imposition of a penalty of 50% of the entire short-payment amount, along with interest, arguing that this penalty was unjustified and could threaten the company’s existence.
The fallout of the AGR judgment has been significant, increasing the liabilities of Bharti Airtel and Vodafone Idea to over Rs 90,000 crore. Following the judgment, the companies sought more time for payment, which was granted over a 10-year period.
The government now holds a 33% stake in Vodafone Idea, obtained in lieu of interest dues resulting from the AGR and spectrum auction payment deferment.
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