Madras High Court directs DoT to give a hearing to RCom

Dispute arises on a demand of Rs 219 crore with penalty and interest raised by the department

The Madras High Court has directed the department of telecommunications (DoT) to afford an opportunity of hearing to Reliance Communications before taking any decision related to a dispute pertaining to a demand of Rs 219 crore along with the penalty and interest it collected from the company towards the Spectrum Usage Charges (SUC).

The company has already submitted a representation to DoT related to its dispute.

The division bench, comprising judges Huluvadi G Ramesh and M V Muralidaran, directed DoT that if any order has already been passed by the department and the same has not been communicated to the company in view of the fact that three years have already passed since the filing of the representation and that according to the petitioner, the quantum of amount has also not been calculated in line with the stipulated formula, the department shall communicate the order to the petitioner and after affording an opportunity of hearing to the petitioner, pass appropriate orders afresh on the representation in accordance with law within a period of four weeks from the date of receipt of a copy of the order.

The demand, made by DoT on January 8, 2013, amounting to a cumulative size of around Rs 219 crore related to adjusted gross revenue (AGR), penalty and interest thereon towards SUC under the Unified Access Service Licence (UASL) for 16 circles, including the Tamil Nadu circle, from the financial year 2005-06 to 2007-08.

The petition was filed seeking direction to quash the demand and for a direction to DoT to apply clauses of the UASL while calculating AGR, as the revenue generated by the company based on telecom activities has to be calculated and not on any other revenues not connected with the telecom activities.

The company said while the UASL is a percentage of AGR earned from the wireless subscribers, for the financial years 2005-06, AGR has been calculated on the income generated by the petitioner from the non-telecom activities and lease lined or bandwidth activities.

It said the AGR should not be imposed on non-telecom activities and that being the case, when the main demand itself is illegal, penalty on this amount cannot be sustained. It also added the department has tried to unilaterally amend the licence conditions, which is per se illegal.

While seeking for the allocation of 4G spectrum licence, a condition was imposed by the department that all arrears have to be paid and the company paid the demand amount, includimg the penal interest to apply for the licence.

The company said the condition was a coercive step taken to get the dues settled and no proper calculation has been given by the department and no opportunity of hearing was afforded to put forth its grievances before the demand was made.

The company has also submitted representation to DoT on this and the additional solicitor general appearing for the department submitted that an order have already been passed on the representation. However, the company said that no order has been passed on its representation.

The court observed that since the representation was already given, it would be suffice to direct the department to consider it and dispose of the same after affording an opportunity of hearing to the company.

Considering that the amount has already been deposited by the company under protest for the purpose of participating in the 4G auction, the Bench added that it is for the department to calculate the amount due to it on the basis of the stipulated formula agreed by the parties and if any excess amount is collected, the same may be refunded to o the petitioner.

In case any adverse order is passed or if the company is aggrieved by any order passed by the department, it has the liberty to approach the appropriate forum to redress its grievances, said the order.