SC refuses to change AGR definition: How the story has unfolded so far

A look at the AGR definition controversy and it has played out since 1994, when companies were awarded telecom licences and the terms of reference for licence fees were defined

In a blow to telecom operators Bharti Airtel and Vodafone-Idea, the Supreme Court on Thursday rejected their plea to revise the government’s definition of adjusted gross revenue (AGR) and refused to give them any relief on their pending payment of close to Rs 50,000 crore. The apex court will later decide the timeframe within which the operators would have to pay up.

Here is a detailed timeline of events capturing the controversy:

1994: With the introduction of the National Telecom Policy, a number of companies were issued telecom licences, for which they were expected to pay a fixed fee every year.

1999

* The service providers failed to pay the licence fee and had to be given a bailout package vid a letter dated July 22, 1999.

* According to this letter, service providers had to pay a certain portion of their adjusted gross revenue (AGR) as licence fee with effect from August 1, 1999. The government was to decide the proportion of AGR to be charged as licence fee after receiving the recommendations of the Telecom Regulatory Authority of India (Trai).

* After the licence agreement was amended and an AGR-based mechanism was introduced, all service providers had to pay their license fees on the basis of the AGR definition prescribed by the government.

2003: A few members of the Association of Unified Telecom Service Providers of India (Auspi) moved the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) questioning the validity of AGR’s definition in the licence agreement.

2006: On July 7, TDSAT held that service providers needed to pay as licence fee a portion of their revenue from those activities that were related to the telecom licence, not other activities. With regard to this, it sought Trai’s recommendations on the definition of licensed and non-licensed activities. Trai subsequently gave its recommendations defining the items to be included in the AGR for payment of licence fee.

2007

* The department of telecommunications (DoT) challenged in the Supreme Court TDSAT’s jurisdiction over terms of the telecom licences that had previously been accepted unconditionally by licencees.

* In an order dated January 19, the apex court dismissed DoT’s appeal, and directed it to raise its contentions before TDSAT.

* On August 30, TDSAT accepted most of Trai’s recommendations and passed an order that would be applicable to those Auspi members that had moved the TDSAT with effect from the date when they filed their petitions.

* Auspi and the Cellular Operators Association of India (COAI) filed a review petition urging that the TDSAT order be made applicable to all members of the two bodies from the date of filing of their petition.

* DoT again moved the Supreme Court against the August 30 TDSAT order.

* Even as the DoT appeal was pending before the apex court, some telcos filed petitions before TDSAT requesting to be included in the tribunal’s August 30 order.

2011

* The Supreme Court on October 11 held that TDSAT’s August 30, 2007, order should be set aside. It allowed licencees to challenge any demand before TDSAT, which would have to go into the merits of the claim and decide whether it was in accordance with the licence agreement and in consonance with the AGR definition.

* All telecom licencees moved TDSAT challenging the basis of DoT’s licence fee demand.

2015

* On April 23, TDSAT allowed all operators’ petitions and set aside DoT’s demands. It also directed DoT to rework the licence fees.

* DoT moved the Supreme Court against the TDSAT order.

2019: The Supreme Court, having heard all arguments in the case, held that telecom operators could not be given any relief with respect to pending licence fee claims.