TDSAT rules on exemption of PSUs from AGR dues

3 Mar 2022

The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) has ruled that the government cannot treat state-owned ventures and privately owned companies differently with regards to the collection of Adjusted Gross Revenue (AGR)-related dues. The Economic Times writes that the court’s ruling followed petitions from data centre and cloud infrastructure operator Netmagic Solutions and ICT solutions provider Data Ingenious Global Limited (DIL) regarding the exemption of public sector undertakings (PSUs) from the Supreme Court’s October 2019 ruling on AGR. The apex court’s decision had ordered that revenue from non-telecom sources be included in the calculation of AGR, upon which operators’ licence fees are based.

The TDSAT’s decision states that the government cannot exempt PSUs from paying AGR dues on the basis that they only generate a small portion of their income from telecom-related services, and that an exemption could only be provided to PSUs if the same option is provided to private operators. The paper notes that 13 PSUs have telecom licences but have been exempted from paying AGR dues by the government. The companies in question include Oil India, Railtel Corporation, PowerGrid, and Gail India. Defending the exemptions, the Department of Telecommunications (DoT) had claimed that PSUs ‘form a class in themselves as they substantially discharge governmental functions and represent public funds’ and, as such, it is in the public interest to grant them an exemption from the fees. The DoT also argued that the revenue generated by the PSUs from telecom-related services was ‘negligible’. Finally, the DoT noted that as the Supreme Court’s judgement had been issued in relation to a long-standing case regarding mobile service providers, it had opted to withdraw notices issued to other telecom service providers – such as ISPs and fixed voice providers.

Whilst the TDSAT accepted the DoT’s last argument, concerning the narrowing of the apex court’s decision to mobile operators, it rejected the government’s other justifications. The appellate court noted that the government could not differentiate between licensees based solely on their ownership, and that there was no legal basis for differentiating between companies based on the ratio of revenue from licenses versus non-licensed activities.

India, Department of Telecommunications (DoT)