Vodafone Idea is hoping that it will be able to do a better job of convincing Supreme Court of India to allow the government to rectify the mathematical and compilation that crept into the calculation of its humongous regulatory levies that now threaten its very existence.
A Supreme Court bench headed by Arun Mishra had slapped payment liabilities of around Rs 58,000 cr on Vodafone Idea in 2019. This was done after holding that any and every revenue generated by a company with a telecom license is subject to revenue sharing provisions under the telecom license.
Under the revenue sharing rules contained in telecom licenses, holders of these licenses are obligated to pay the government around 8% of their revenue, subject to some minor exclusions.
The revenue-share provisions were introduced in 1999 after the financial condition of telecom operators worsened and they could no longer afford to pay upfront for spectrum and license.
Hence, to provide them relief, the government stopped charging for spectrum and license upfront, and said they could pay a share of their revenue instead.
This policy was again shifted back to an upfront payment regime in 2017 when the Supreme Court ruled that natural resources like spectrum cannot be allocated without a transparent auction process.
However, even as upfront payments were reintroduced, the government failed to roll back the revenue share provision, thus forcing telecom companies to pay both.
Meanwhile, soon after the revenue share regime was introduced in 1999, the government and the operators got into a dispute over what all are exempted from the definition of shareable revenue.
While the government wanted a share of practically all the revenue generated by telecom operators, the telcos said the government’s revenue share should be calculated on their telecom-related revenue only, and not on their revenue from unrelated businesses and activities, such as rental income.
The telcos won their case in the Telecom Disputes Redressal & Appellate Forum (TDSAT), but the government went on appeal in Supreme Court, where a bench headed by Arun Mishra ruled in favor of the government and said telcos should pay a share of their non-telecom revenue as well as part of their telecom license obligations.
CALCULATION ERRORS
During the arguments, the telcos pointed out that even if they were to pay a share of their entire revenue, government officials had made several mistakes in calculating the figures and some of their revenues have been counted twice. They also alleged that there were mathematical errors in the calculations.
According to Vodafone Idea, its total liabilities was only around Rs 30,000 cr, and not Rs 58,000 cr as calculated by the government. Bharti Airtel too pointed to similar errors and mistakes.
However, the Arun Mishra bench refused to look into such allegations and said whatever the government has asked, the companies must pay.
This forced the companies to file a modification application in the Supreme Court again. However, the court last month dismissed the petition, saying that the Arun Mishra judgment had clearly indicated that the scrutiny and recomputation of the dues was not allowed and they must pay what the government asked.
Speaking to investors recently, Vodafone Idea CEO Ravinder Takkar admitted that the companies had probably not done a good job of putting forth their arguments in the modification petition last month, and said he hoped to do a better job in the upcoming review petition.
“Somehow, in our AGR [judgement] modification application, the court felt that we are trying to reopen the judgment and we are trying to reopen the case and challenge what was originally passed,” he said.
“We want it to be very clear, and this is what we have filed in our review petition, it is not our intent to challenge the AGR definition anymore, it is not our intent to relitigate that matter. That matter is closed.
“Our intention is solely for these manifest errors to be fixed, and frankly we didn’t do a good job last time around in the modification application, and our hope is that the court will allow us to explain that in a more clear manner and then allow DoT to fix those errors.”
Takkar said it is one of the principles of justice that one should not be asked to pay twice on account of the same charge or levy.
“Our contention has been that in the amount that has been written up in the judgment, there are errors and mistakes — manifest errors, mistakes, calculation errors — that are there, which need to be fixed.
“It’s not necessarily pointing the finger at somebody to say they made a mistake; it’s a lot of data, for many many years for many circles for many companies and it is very possible, that some of these errors would take place, over the years in which these calculations are done.
“Our intent is to say that we would like the government to fix those errors and mistakes, and we have, in fact, sent the details of each of those mistakes and errors to the government, kind of compiled it all together based on the assessments we have received.
“All we are requesting Supreme Court is to allow the government to fix those errors and mistakes, so that what I’d called proper justice would be granted, because clearly, it cannot be the intent of either the government or the Supreme Court to have us pay more, or twice, than what has actually been…
“There’s no reason why, in our country, we should have a situation where we are asked to pay many times over for something that we have already paid for. Our aim is that in this review petition, we can explain to the court that challenging the original verdict is not our intent — that clarity can be provided,” he added.
The review petition is crucial for Vodafone Idea, as it is likely to shut down if the court again refuses to listen to its arguments, throwing the livelihoods of lakhs of people into question.