SC issues notice to Vodafone, TRAI

The Supreme Court today issued notice to Vodafone Essar South Ltd and TRAI on a petition filed by the Centre challenging the TDSAT's judgment relating to adjusted gross revenue for the purpose of levying licence fee.

The sector tribunal's ruling in August 2007 had excluded income from dividend and interest on savings, capital gains as well as benefits from foreign exchange from telecom companies' aggregate gross revenue for calculating licence fee to the government.

However, it had included income earned from telecom handsets given to subscribers bundled with their services in AGR in calculating licence fee.

Besides, the rent earned from property, and the income from the sale or lease of telecom towers and dark fibre lines was included in cellular operators' AGR.

A bench headed by Justice Arijit Pasayat sought reply from Vodafone (formerly called Hutchison Essar South Ltd) and the Telecom Regulatory Authority of India (TRAI).

Earlier, the apex court in November 2007 had issued notice to the Association of Unified Telecom Service Providers of India on a similar petition pending before it.

Under the National Telecom Policy, operators have to pay 15 per cent of their revenue to the telecom department as revenue share or licence fee under the AGR regime.

The TDSAT had passed the judgment on a petition filed by the Association challenging telecom regulator TRAI's recommendations to include such kinds of income in AGR.

However, Vodafone had also challenged TRAI's recommendations on March 7 last year, after the TDSAT had given its verdict on the issue.

According to the Ministry of Communications, basic and cellular operators, including Vodafone, had unconditionally accepted the migration package of July 22, 1999, which gave them the option to migrate to revenue-sharing instead of fixed licence fee.

The migration package stipulated that the licence fee would be payable as a percentage share of gross revenue.

Besides, the package provided that gross revenue for this purpose would be the total revenue of the licensee company excluding PSTN call charges paid to DoT and MTNL and service tax collected by the firm on behalf of the government from their subscribers.

The ministry further said that Vodafone was granted licence for national long-distance (NLD) services in November 2006 on paying a percentage share of gross revenue under the licence.

The private telecom operator had accepted the licence "with an open eye after reaching to the consensus of mind".

After taking the benefit of the pacakage, Vodafone, which was bound by the terms and conditions of the agreement, had questioned the definition of 'Gross Revenue' and 'Adjusted Gross Revenue' as contained in the licence agreement dated November 10, 2006, on the basis of the migration package, the petition filed stated.

However, the TDSAT, on Vodafone's plea, had issued notice to the Centre and allowed the private operator to claim the benefit of licence fee in its August 2007 verdict.

Objecting to this, the Ministry in its appeal said that it was not for the TDSAT to grant final relief to Vodafone when an appeal on the issue was pending before the apex court.