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Supreme Court on AGR case

By Madeeha Khan

The Supreme Court on 11th June directed the telecom companies to file revenue and paid tax details of the last 10 years to determine the firms’ capability to clear adjusted gross revenue (AGR) related dues to the government.

The supreme court insisted on some security or bank guarantee from telecom companies to ensure that they abide by whatever payment plan is agreed upon. Department of Telecommunication removed time to reply to affidavits filed by telecom companies, including Bharti Airtel and Vodafone Idea Ltd which have been asked to come up with a reasonable plan.

As the telecom industry is one of the few sectors that is making the most amount of money, the Apex court asked them to pay up some AGR as there is a need of the revenue for the ongoing COVID-19 pandemic. After being pulled up last week for making unreasonable demands, DoT told the court that 96 % of AGR demand from PSU’s amounting over 3.7 lakh crore, was being withdrawn.

A bench of Justices Arun Mishra, S Abdul Nazeer and M R Shah was informed by Solicitor General Tushar Mehta that DoT has filed an affidavit explaining the reason for raising the demand of AGR related dues against the PSUs. 

Mukul Rohatgi a senior advocate appearing for Vodafone Idea, said that “We have already paid Rs. 7,000 crores to the DoT but keeping in mind the present dubious financial condition, we were not in a position to furnish any bank guarantee.” The Vodafone Idea Counsel told the apex court that the AGR dues could be paid only via staggered payments for a period of 20 years. It said it could only pay the pending dues after earning the money. On this the Supreme Court asked how it had made provisions worth Rs. 52,000 crores of contingent liabilities if it was not making any money. The company said it had not made any profit for the past many quarters and most of its assets had been given as bank guarantee to get loans.

On the other hand, Bharti Airtel also told the Supreme Court that its bank guarantee worth Rs. 10,800 crores were also pending with the DoT, which it said could be encashed if the telco defaults on its due payments. The company pleaded that it had already paid 70% of the total AGR to the DoT.

As per the DoT’s submission to the Supreme Court, the total due amount is Rs. 119,292 crores, of which the telecom players have so far paid Rs. 25,896 crores. Thus, the balance amount due is Rs. 83,520 crores. Reliance Jio is the only telco that doesn’t have any heavy dues. The new entrant in the telecom market is required to pay Rs. 70.5 crore as per the DoT

The Supreme Court, however, said that, “The telecom companies need to pay a reasonable amount up front. It is not possible for us to pass orders without reasonable upfront payment.” The supreme court has hence adjourned the case for the third week of July.

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Written by Maverick times

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