Breather for telecom companies as govt reviews stand on SUC dues

Recovery of one-time spectrum charges to be reconsidered

The Department of Telecommunications (DoT) on Tuesday told the Supreme Court it was reconsidering its decision to proceed with an appeal filed against a tribunal order in April 2019 on recovering one-time spectrum user charges (SUCs) of Rs 40,000 crore from telecom companies.

It asked the court to give the government three weeks so that it could take an “informed decision” whether to proceed with its appeal against an order by the Telecom Disputes Settlement and Appellate Tribunal.

The Supreme Court adjourned the hearing for November 19.

After the Supreme Court had cancelled 2G spectrum licences, the DoT after 2012 sent notices to operators, demanding charges for the spectrum allocated under administrative pricing. It had two components -- one, retrospective demand from July 1, 2008, to December 31, 2012, for any spectrum held beyond 6.2 MHz; and two, prospective demand from January 1, 2013, to the expiry of spectrum beyond 4.4 MHz.

The TDSAT, in July 2019, cancelled the retrospective demand the DoT had made. However, it allowed the DoT to levy one-time spectrum charges beyond 6.2 MHz on a prospective basis.

The DoT appealed against the order and subsequently the Supreme Court said the status quo be maintained regarding the demands in December 2020.

The DoT’s move is significant because this is the first straight attempt by the government to clear the backlog of the huge number of pending cases in courts between it and telecom companies (telcos), involving a substantial financial impact.

According to sources, the number of cases in the Supreme Court is more than 200. A DoT assessment in 2018 said the number of cases pending in the Supreme Court and high courts was over 2,800.

They concerned financial demands made by the DoT, disputes on interpretations of notifications, and the law and appeals reversing decisions of lower courts.

The DoT, in an affidavit before the Supreme Court, said it had taken this decision considering the sector’s financial crises. It told the court the cabinet in September had cleared a telecom package to ensure the viability of companies and prevent a monopolistic situation in the sector. It also pointed out the Indian Banks’ Association had conveyed to the government any adverse developments in the telecom sector might lead to a duopoly, shrinking competition, and an adverse impact on the banking system, which has a huge exposure to the sector.

KEY ISSUES UNDER LITIGATION

• Alleged violation of electromagnetic fields by telcos
• Enhanced microwave charges imposed by DoT
• Penalty notices on violation of conditions of ILD (International Long Distance) service licence
• Issues arising out of transfer and merger guidelines
• Broadband wireless access spectrum user charges floor price
• Subscriber verification-related penalties

Officials who have worked in the telecom department say earlier no attempt was made to redress the issues through an out-of-court settlement.

Lawyers involved in the cases are of the opinion that the department’s approach was adversarial.

But former DoT officials who worked during that time say with the ministry hit by scams, there was the fear that any out-of-court settlement could come under the scrutiny of the Comptroller and Auditor General or other government agencies. Shifting from its earlier stance, the DoT is now considering a scheme akin to “Vivad Se Vishwas” for resolving such cases.

That move, many say, could be a fundamental change in resolving this growing contentious issue, said Sameer Chugh, partner, Cyril Amarchand Mangaldas.  Adds Tony Verghese partner in J Sagar Associates: "Ultimately the DoT will need to provide the SC with a sufficiently reasonable proposal which takes care of the public interest and only upon satisfaction of the said proposal , would I think such a proposal will be allowed by the SC."      

Matters came to a head with the Supreme Court directing the telecom companies to pay adjusted gross revenue dues with interest as well as penalties on interest. That decision virtually crippled many telecom companies because they had to fork out around Rs 1 trillion. It is one of key reasons why the government has had to offer a telecom package aimed primarily to provide the companies more breathing space by giving them a moratorium of four years.

A senior executive of a telecom company said: “We do not want such a thing to happen again and would welcome any move to settle the case out of court.”

The DoT’s decision to reconsider its plan to proceed with the appeal against the TDSAT order seems yet another step to rectify past anomalies. The telecom sector, which has been extremely litigious, will see a decline in litigation and pave the way for more focus on business.