INDIA BUSINESS WORLD - JANUARY 1^st - JANUARY 15^th - 2008

SUPREME COURT STAYS TDSAT RULING ON AGR REGIME

The Supreme Court, in an interim order has stayed TDSAT ruling on the AGR regime on Department of Telecom (DoT) plea. The Tribunal's ruling had excluded income from dividend and interest on savings, capital gains as well as benefits from foreign exchange from telecom companies' AGR for calculation of licence fee to the government. Under the National Telecom Policy, operators have to pay 15% of their revenue to telecom department as revenue share or licence fee under the AGR regime.

A bench of Justice HK Sema and Justice Markandey Katju said, "In the meanwhile, there will be no adjustment by the operators". The court also issued notices to various telecom service providers including Cellular Operators Association of India, Bharati Cellular, Hutchinson, IDEA celluar, VSNL, Tata Teleservices and others. Additional Solicitor General Gopal Subramanium and advocate Wasim Qadri on behalf of DoT said that Tribunal's order "interfering' in the definition of 'Gross Revenue' and 'Adjusted Gross Revenue' agreed to between the government and telecom service providers amounted to rewriting of the terms and conditions of licences, which is illegal.

"Whether TDSAT has jurisdiction to rewrite the terms and conditions of license and whether the expression 'gross revenue' and 'adjusted revenue' which has been expressely defined in the license agreement could be allowed to be changed and the items which are included in 'adjusted gross revenue' could be adjusted upon by the TDSAT and whether such adjustments will not amount to changing the terms and conditions of the license"? It is a substatial question of law to be decided by the apex court, said government in its appeal. Tribunal in its order passed in August examined the recommendations of Trai as a natural corollory of its earlier order seeking Authority's opinion in the matter of AGR. While doing so, Tribunal erroneously derived its own definition of Gross Revenue, said centre.