SC allows Centre to reassess Vodafone Idea's AGR dues, cites policy grounds

The Supreme Court said the Centre can review Vodafone Idea's AGR dues, calling it a policy decision; the move gives relief to the debt-hit telecom firm and protects 200 million consumers

In a major relief for Vodafone Idea, the Supreme Court on Monday allowed the union government to revisit the issue of reassessing the telecom operator’s adjusted gross revenue (AGR) dues. The court observed that the decision falls within the union government’s policy domain, Bar and Bench reported. 

A bench led by Chief Justice of India BR Gavai passed the order after hearing Solicitor General Tushar Mehta, who told the court that the government now holds 49 per cent equity in Vodafone Idea and that the move was made in the interest of over 200 million consumers. 

“The government has infused equity to the extent of 49 per cent. There are 200 million consumers. That was one of the reasons for which the government took this decision. The consumers would suffer... they have concerns, something duplicate billing, some over-invoicing etc, this what I have proposed,” Mehta said, as quoted by Live Law.

 

 

CJI clarifies order limited to this case

Clarifying the scope of the relief, the Chief Justice said, “We clarify that this is in the policy domain of the Union... there is no reason as to why that Union should be prevented from doing, with that view of the matter, we dispose of the writ petition.”

The court said that the order was passed considering the specific facts of the case, including the Centre’s equity infusion and the interests of millions of subscribers. 

Vodafone Idea’s shares jumped 9 per cent after the Supreme Court ruling on Monday. At 11.48 am, the stock was trading at ₹10.47 on the NSE, up 9 per cent. During the day, it touched a one-year high of ₹10.57.

 

AGR dues case: Timeline and background

On October 13, the Supreme Court had deferred hearing Vodafone Idea’s plea in the AGR dues case to October 27. The company had challenged the Department of Telecommunications’ (DoT) demand seeking to quash additional AGR dues of ₹5,606 crore for the period up to FY2016-17. 

AGR (adjusted gross revenue) is the income figure used by the government to calculate licence fees and spectrum usage charges payable by telecom operators. 

The matter has been pending for years, with multiple adjournments granted at the request of Vodafone Idea and the Solicitor General, who said the government was actively working on a resolution since it held nearly 50 per cent equity in the company.

Vodafone Idea has asked the DoT to “comprehensively re-assess and reconcile all AGR dues up to FY 2016-17” following the Deduction Verification Guidelines issued on February 3, 2020.   

 

SC’s past rulings on AGR

The apex court in 2021 had refused to review its earlier order rejecting the telecom firms’ pleas to rectify alleged errors in AGR calculations. Telecom companies, including Bharti Airtel and Vodafone Idea, had argued that there were arithmetical mistakes and duplication of entries in the DoT’s assessment. 

In September 2020, the Supreme Court had allowed telecom operators 10 years to clear AGR dues amounting to ₹93,520 crore. It directed companies to pay 10 per cent of the total dues by March 31, 2021, and the remaining balance in annual instalments until March 31, 2031. 

The court had also made it clear that the DoT’s assessment of AGR dues would be final and that no reassessment or dispute could be raised by telecom operators.

 

Evolution of the AGR definition

The Supreme Court’s judgment in October 2019 upheld the DoT’s definition of AGR, which included both telecom and non-telecom income such as interest or profit from asset sales. 

Following industry pushback, the government revised AGR rules in 2021, excluding non-telecom income from the calculation. This change significantly reduced the financial burden on telecom companies, including Vodafone Idea.