Oil India moves SC against DoT's Rs 48,000 cr demand on Rs 1.47 cr revenue

State-owned Oil India Ltd (OIL) on Wednesday said it has filed a clarificatory/modificatory petition in the Supreme Court against a Rs 48,000 crore demand raised by the telecom department on cumulative revenue of Rs 1.47 crore it had earned on an NLD telecom licence.

Following the October 24 Supreme Court ruling that non-telecom revenues of telecom firms such as Bharti Airtel and Vodafone Idea should be included for considering payments of government dues, the telecom department asked OIL to pay Rs 48,000 crore in principal dues together with interest and penalty. The dues sought are double the net worth of OIL.

"OIL had obtained a National Long Distance Service Licence (NLD Licence) to establish Supervisory Control and Data Acquisition System (SCADA System) for control, management, and protection of OIL's pipeline network used for transportation of crude oil, natural gas, and petroleum products," the company said in a statement.

The NLD licence is predominantly used for the SCADA system and only the spare bandwidth capacity is leased out to other telecom operators.

"As per the licence terms, licence fee is to be paid on gross total revenue from services provided under the NLD licence. Since the award of NLD licence, the cumulative revenue of Rs 1.47 crore is earned by OIL from the leasing of spare bandwidth capacity on which all applicable licence fee and other statutory dues as per licence terms have been paid by OIL regularly," it said.

The company said based on the recent Supreme Court judgment "Department of Telecommunications (DoT) issued demand notices to OIL also seeking payment of licence fee on total reported revenue including revenue from sale of crude oil, natural gas etc, which neither relate to the NLD licence nor can be treated as supplementary/ value-added services related to the NLD licence." "Till date, OIL has received demand notices for the period from FY 2007-08 to FY 2018-19 amounting to over Rs 48,000 crore including licence fee, penalties and interest," the statement said.

OIL said it has taken up the matter with the DoT and the Ministry of Petroleum and Natural Gas along with other affected central public sector enterprises and "explained the non-applicability of interpretation of AGR to non-telecom companies," it said.

"On January 22, 2020, OIL has filed a clarificatory/modificatory petition before the Supreme Court against its order and the next course of action will be based on the outcome of the petition," the statement added.

From gas utility GAIL, the DoT has sought Rs 1,72,655 crore in dues on IP-1 and IP-2 licences as well as Internet Service Provider (ISP) licence. In response, GAIL has told the DoT that it owes nothing more than what it has already paid to the government.

The firm told DoT that it had obtained ISP licence in 2002 for a period of 15 years, which expired in 2017. But GAIL never did any business under the licence, and since no revenue was generated it cannot pay any amount.

On IP-1 and IP-2 licences, GAIL has told the DoT that it generated Rs 35 crore of revenue since 2001-02 and not Rs 2,49,788 crore that has been considered for levying past dues, they said adding the revenue number the DoT is considering is after adding all the revenues that the company earned from gas trading and transportation business.

Sources said the dues being sought are more than three times the net worth of GAIL and several times the actual revenue earned.

While telcos such as Bharti Airtel and Vodafone Idea may have had non-telecom revenues generated from using the government licence and spectrum, firms such as GAIL and OIL had no such revenue.

The DoT is seeking Rs 1.47 lakh crore from all telcos in past statutory dues.

Besides GAIL and OIL, the DoT is seeking Rs 40,000 crore from PowerGrid which had both a national long-distance as well as an internet licence.