The burden of one-time spectrum charge (OTSC) for incumbent operators like Bharti Airtel and Vodafone Idea just came down by more than 60% as the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has ruled that the department of telecommunications can only charge for administratively allocated spectrum to these firms beyond 6.2 MHz and not 4.4 MHz.
The telecom tribunal has also said in its order which was pronounced on July 4 that this levy cannot be charged from a retrospective basis, that is 1.7.2008, when a decision to this effect was taken by the government but can be charged only prospectively, that is 1.1.2013, the date on which the government notified this decision.
The government had raised a total demand of around Rs 25,000 crore on nine telcos in 2013 for spectrum held beyond 6.2 MHz.
The decision to levy OTSC was taken by the United Progressive Alliance government in the aftermath of the 122 2G licences given by the then telecom minister A Raja.
The licences were cancelled in February 2012 by the Supreme Court but the furore it raised as these were given at 2001 rates of Rs 1,658 crore led the government to charge for spectrum given to the operators beyond the contracted amount through administrative orders.
So far none of the operators have paid the OTSC, the total amount of which is around Rs 25,000 crore, as all of them have got a stay order by high courts or the TDSAT. Still, every time there’s a merger, acquisition or trading of spectrum by any company, the DoT raises the demand on the concerned operators as a result of which the matter again comes up in in courts or the TDSAT.
The July 4 order of the telecom tribunal is on the appeal of Vodafone Idea, which merged in August 2018.
Prior to 2010, operators got 4.4 MHz spectrum bundled with licences and subsequent tranches came on achieving certain subscriber levels. The government had contended that it was contractually bound to give only 4.4 MHz which came bundled with the licences and is free to charge for additional amount allocated. The operators had opposed this stating that since they paid higher spectrum usage charge for spectrum beyond 6.2 MHz so any OTSC was not legitimate.
The TDSAT discarded the arguments of both the sides. It said that operators cannot claim that they are not liable to pay anything as OTSC and government is wrong to say that only 4.4 MHz was contract bound. “Demands for OTSC on spectrum allotted beyond start-up spectrum and up to the contracted limit of 6.2 MHz are not sustainable and are accordingly set aside,” the tribunal said in its 36-page order. “In case of spectrum beyond 6.2 MHz and allocated before 1.7.2008, respondent (DoT) can levy OTSC demand only prospectively, I.e with effect from 1.1.2013,” it added.
On why retrospective demand is unsustainable, the TDSAT explained, “Keeping in view the requirement of natural justice, levy of any such demand has to be accompanied with an option to surrender the allotted spectrum. However, we notice that the demand notice is given in 2012 to be effective from 2008, but option to surrender is from 2012 and not from 2008. Exercising the choice of surrender with effect from 2008 actually will be an impossibility, since no notice for charging OTSC was given to the petitioner in 2008. Therefore, retrospectivity of demand in this case cannot be held to be sustainable. However, levy of such demand prospectively suffers no such infirmity”.
The order is sure to be challenged by the DoT in the Supreme Court.