The decision of the Supreme Court permitting reconsideration of Adjusted Gross Revenue (AGR) dues of Vodafone is a welcome step and will set right the damage done by the judgment in Union of India vs Association of United Telecom Service Providers of India that was delivered in October 2019. When the telecom sector was opened to private operators in 1994, a fixed licence fee had to be paid. From 1999, the New Telecom Policy made a shift to a revenue sharing model. This model is credited for the huge growth of the sector.

The definition of the word “gross revenue” was very wide and included interest, dividend, and other miscellaneous revenue. The AGR reduced the gross revenue by certain items, including service tax and sales tax. Telecom operators had to share 15 per cent of AGR as licence fees with the Union of India; this was later reduced to 8 per cent.

A major area of dispute was whether AGR represented only the actual revenue and not the notional revenue. Most telecom operators had a tariff rate but would grant discounts and rebates to customers to promote sales. Thus, a pre-paid voucher that had a maximum retail price of Rs 100, was sold at a 25 per cent discount and the customer paid only Rs 75. While the Department of Telecommunications insisted that the telecom operator had to pay 8 per cent of Rs 100, the telecom operators claimed that this........

© Indian Express