It is being explained that RailTel is about to embark on an IPO and it is critical for the PSU to rid itself of this liability.

AGR dues RailTel Corporation moves Supreme Court for relief
Money AGR Tuesday, January 07, 2020 - 17:24

RailTel Corporation is the first public sector company to approach the Supreme Court for relief in the AGR dues raised by the Department of Telecommunications (DoT) where the company has been called upon to pay ₹290 crore. The Supreme Court had upheld the plea by the DoT earlier that companies which were holding telecom licences were liable to pay the spectrum dues and licence fees calculated on their overall revenue (adjusted gross revenue, AGR) and not the revenue from telecom alone.

The appeal by RailTel in the Supreme Court claims it had not obtained any telecom licence and had only internet service (ISP) and national long distance (NLD) licences and had been wrongly clubbed in the case by DoT. They are asking the SC to remove RailTel from the purview of its judgement.

It is being explained that RailTel is about to embark on an IPO and it is critical for the PSU to rid itself of this liability. The company has also stated in its appeal to the apex court that it has several key projects on hand which it cannot execute if it is forced to pay this sum of ₹290 crore demanded by DoT.

The crux of this issue lies in clause 19 of the licence agreement that the telecom companies entered into while receiving their licences. This clause states that ‘any other miscellaneous revenue’ for calculating the amount of licence fee is payable. RailTel claims these words are not included in the ISP and NLD licence that it had entered into.

Giving out the figures, RailTel says it had an income of ₹571.43 crore in the financial year 2018-19 from the licence related business activity while the other business activity gave it a revenue of ₹445.87 crore. The plea says this additional income has nothing to do with the licence terms and that RailTel Corporation has no liability under this judgement.

It will be interesting to see what stand the court takes in this case. There are other PSUs, like GAIL India and Power Grid Corporation where the liability or demand raised by DoT is multiple times the amount raised on RailTel. They are yet to appeal to the Supreme Court.

The two telecom entities, Bharti Airtel and Vodafone Idea have filed separate pleas asking the SC to review its judgement on the penalty and interest payable, without disputing the main part of the judgement on the calculation using the AGR formula.

Become a TNM Member for just Rs 999!
You can also support us with a one-time payment.