Vodafone-Idea AGR Case: Supreme Court puts decision on hold till October 13

The Supreme Court on Monday (October 6) deferred to October 13 the hearing on a plea filed by telecom major Vodafone Idea Ltd (VIL) seeking quashing of additional Adjusted Gross Revenue (AGR) demands raised by the Department of Telecommunications (DoT) for the period up to 2016-17.

A bench headed by Chief Justice of India B. R. Gavai and Justice K. Vinod Chandran, which was scheduled to hear the case, accepted the request of Solicitor General Tushar Mehta, representing the Centre, to postpone the hearing.

Senior advocate Mukul Rohatgi, appearing for Vodafone Idea, supported the submission.

Vodafone-Idea AGR Case: What’s the Matter?

Vodafone Idea has challenged DoT’s fresh demand of Rs 5,606 crore relating to the financial year 2016-17.

The company has sought a direction for the DoT to “comprehensively re-assess and reconcile all AGR dues for the period up to FY17” in line with the Deduction Verification Guidelines of February 3, 2020.

The fresh plea comes amid the long-standing AGR dispute, where telecom companies, including Vodafone Idea and Bharti Airtel, have been battling the government over the calculation of dues.

Centre’s Stand

During the proceedings, Solicitor General Mehta told the court that the Centre is making efforts to arrive at a resolution, noting that the government now holds nearly 50 per cent equity in Vodafone Idea.

This stake came after the telco converted a part of its dues into equity in 2023, making the government a direct stakeholder in the survival of the operator.

“Some solution may have to be found out, subject to your lordships’ approval. If it can be kept next week, we can think of some solution,” Mehta said, while seeking the deferment.

AGR Dispute Background

The AGR issue has been one of the most contentious legal battles for India’s telecom industry. Adjusted Gross Revenue is the income figure used by the DoT to calculate licence fees and spectrum usage charges owed by telecom operators.

Initially, AGR included both telecom and non-telecom revenues, such as interest from deposits and asset sales, significantly increasing the liabilities of telcos.

In October 2019, the Supreme Court upheld the DoT’s definition of AGR, dealing a major financial blow to operators.

Later, in September 2020, the court allowed telecom operators to pay their dues over 10 years, with 10 per cent upfront by March 2021 and the balance in annual instalments until 2031.

In July 2021, the apex court dismissed pleas by Vodafone Idea and others seeking rectification of alleged errors in the calculation of dues, ruling that the DoT’s demand was final and there should be no reassessment.

The companies had argued that there were arithmetical mistakes and duplications in the calculation, but the court refused to entertain those arguments.

In 2021, rules were later relaxed to exclude non-telecom income from AGR calculations, reducing future liabilities. However, the past dues remain a major burden.