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SC allows Centre to review ‘adjusted gross revenue’ demand against Vodafone Idea
The company currently faces an additional demand of ₹9,450 crore in AGR dues, including the dues for the period up to financial year 2016-17.
The Supreme Court on Monday allowed the Union government to review and reconsider additional demand in adjusted gross revenue (AGR) dues against financially distressed telecom operator Vodafone Idea (Vi), marking what could be a fresh breath of life for the beleaguered company struggling to stay afloat in India’s hyper-competitive telecom sector.
The company currently faces an additional demand of ₹9,450 crore in AGR dues, including the dues for the period up to financial year 2016-17, which the company pressed for reassessed in the light of the 2020 Deduction Verification Guidelines.
A bench comprising Chief Justice of India Bhushan R Gavai and Justice K Vinod Chandran permitted the government to revisit its earlier demand, observing that the decision to re-examine the issue was a matter within the Union’s policy domain, and that the court saw “no impediment” in the government taking an appropriate decision under law given the peculiar facts of the case.
“The Union is willing to examine the issues further. Taking into consideration that the government has acquired stakes and the issue is likely to have an impact on 20 crore consumers, we see no impediment in the Union government reconsidering the issue and taking an appropriate decision under the law,” the bench said in its order. It emphasised that the permission to review was being granted in the larger public interest and “in the peculiar facts and circumstances of the case.”
The order added: “We clarify that this is a matter within the policy domain of the Union government. If the Union government, in the peculiar facts and circumstances and in the larger public interest, wants to reconsider the issue, there will be no reason why the Union should be prevented from doing so. With these observations, we dispose of the petition. We clarify that this order is passed in peculiar facts and circumstances of the case since the government has submitted it has invested into the company and that the interest of 20 crore consumers is involved.”
At the outset, Solicitor General Tushar Mehta, appearing for the Union government, submitted a note for the bench, stating that the Centre was willing to re-examine the AGR liability considering the “changed circumstances” surrounding Vi.
“This is a company which has seen a huge change in circumstances. The government has acquired and infused almost 49% of stakes in this company. So, the government interest -- which is the public interest, has intervened. There are 20 crore consumers, and it was one of the chief reasons why the government had to intervene,” said Mehta, handing over a note recording the government’s proposal to the bench.
The bench then turned to senior advocate Mukul Rohatgi, representing Vodafone Idea, and observed, “It (the note) takes care of your concerns.” Rohatgi responded, “If it takes care of my concerns that the government will look at all my grievances, I have nothing more to say.”
The court thereafter disposed of the petition, formally recording the government’s assurance that it would reconsider the issue and take an appropriate view under the law.
Monday’s development comes in continuation of the telecom major’s plea filed earlier this year challenging the Department of Telecommunications’ (DoT) fresh demand notice for ₹9,450 crore towards AGR dues. The demand was raised even after the Supreme Court’s 2020 judgment that had settled the final AGR liabilities for all telecom operators, including Vi.
In that verdict, the top court had directed telecom companies to pay their outstanding AGR dues over a 10-year period ending 2031, disallowing any reassessment or correction of the amounts that had attained finality. Vi had argued that the new demand was contrary to the 2020 judgment and further aggravated its precarious financial condition.
The government’s decision to now re-examine the additional demand marks a significant departure from its earlier position and reflects its evolving role as both regulator and stakeholder after the Centre converted a portion of Vi’s interest dues into equity, becoming the single largest shareholder with a nearly 49% stake in the company in 2023.
Vodafone Idea moved the top court in September, seeking to quash DoT’s revised demand for AGR dues. The fresh tax demands include ₹2,774 crore for FY18–19, which the company argues is based on errors such as duplication of figures, requiring reconciliation. In addition, DoT has raised AGR demands for FY17 and revised outstanding licence fees for FY19, prompting the company to request a complete recalculation of dues dating back to the pre-FY17 period.
The total disputed demand amounts to ₹9,450 crore, of which ₹2,774 crore relates to the merged entity Vodafone Idea for FY18–19; ₹5,675 crore pertains to pre-merger liabilities of the Vodafone Group; and the remaining amount arises from other reconciliations flagged by DoT. Earlier, DoT had demanded ₹5,960 crore from Vodafone Idea, and the revised figure of ₹2,774 crore adds to the financial strain on the already debt-laden telco.
Vodafone Idea had argued that these demands exceed the Supreme Court’s 2019 judgment on AGR liabilities, which had settled the scope of dues payable. The company claims the figures are inflated, and that some amounts have been included twice.
In response, the Department of Telecommunications had maintained that the dues are not a “reassessment” of liabilities but represent “gaps” that emerged during the finalisation of financial accounts. In its affidavit, DoT said these figures were not covered by the court’s 2019 ruling and must be paid.
