In a significant development for the telecom sector, the Supreme Court has allowed the Union government to review and reconsider the additional Adjusted Gross Revenue (AGR) dues levied on Vodafone Idea (Vi). This decision offers a potential ray of hope for the company, which has been grappling with financial difficulties in India’s intensely competitive market.
Vodafone Idea currently faces an extra demand of ₹9,450 crore in AGR dues. This includes amounts for the period up to the financial year 2016-17, which the company sought to have reassessed in line with the 2020 Deduction Verification Guidelines.
A bench led by Chief Justice of India Bhushan R Gavai and Justice K Vinod Chandran permitted the government to re-examine its earlier demand. The court noted that such reconsideration falls within the government’s policy domain and found no impediment to the government making an appropriate decision under the law, given the specific circumstances of the case.
The court acknowledged the Union government’s willingness to further examine the issues. It stated, “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 emphasized that this permission was granted in the larger public interest and due to the unique facts of the case.
The court’s order clarified that the matter is within the Union government’s policy purview. If the government, considering the peculiar circumstances and public interest, wishes to review the issue, it should not be prevented from doing so. The petition was disposed of with these observations, noting the government’s investment in the company and the involvement of 20 crore consumers.
Solicitor General Tushar Mehta, representing the Union government, presented a note to the court, indicating the government’s readiness to re-examine the AGR liability in light of Vodafone Idea’s changed financial circumstances. Mehta highlighted the government’s nearly 49% stake in the company, underscoring that public interest, represented by consumer welfare, necessitated this review.
Mukul Rohatgi, the senior advocate for Vodafone Idea, expressed satisfaction with the government’s proposal, stating that if their concerns were addressed, he had no further objections.
This development follows Vodafone Idea’s challenge to a fresh demand notice from the Department of Telecommunications (DoT) for ₹9,450 crore in AGR dues. This demand was issued despite the Supreme Court’s 2020 ruling that had finalized AGR liabilities for telecom operators. The company argued that the new demand contravened the 2020 judgment and exacerbated its already precarious financial situation.
The government’s willingness to reassess the demand signifies a shift from its previous stance, reflecting its dual role as regulator and major stakeholder after converting some of Vodafone Idea’s interest dues into equity in 2023. The total disputed demand includes ₹2,774 crore for FY18–19, which Vodafone Idea claims is based on calculation errors, along with other demands from FY17 and revised license fees.