UNION OF INDIA versus ASSOCIATION OF UNIFIED TELECOM SERVICE PROVIDERS OF INDIA ETC.ETC.

Citation: [2019] 16 S.C.R. 672 · Decided: 24-10-2019 · Supreme Court of India · Bench: ARUN MISHRA · Disposal: Disposed off

Cited by 3 judgment(s) · cites 28 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 16 S.C.R.
UNION OF INDIA
v.
ASSOCIATION OF UNIFIED TELECOM
SERVICE PROVIDERS OF INDIA ETC.ETC.
(Civil Appeal Nos. 6328-6399 of 2015)
OCTOBER 24, 2019
[ARUN MISHRA, S. ABDUL NAZEER
AND M. R. SHAH, JJ.]
Indian Telegraph Act, 1885 – Licence Agreement granted by
the Govt. of India to the Telecom Service Providers – Definition
of gross revenue– Telecom sector liberalized in 1994– Licenses
issued to the service providers stipulated fixed licence fee payable
every year – Since, fixed license fee was very high an option was
given to the licensees to migrate from fixed licence fee to revenue
sharing fee in 1999 – 15% Adjusted Gross Revenue (AGR) was
fixed as license fee which was reduced to 8% in 2013 – Service
providers ensured that they do not pay the licence fee based on
even an agreed “AGR”– Department raised demands – In 2003,
telecom operators filed petition before the Telecom Disputes
Settlement and Appellate Tribunal (TDSAT) challenging the same
– Eventually, TDSAT by order dated. 30.08.2007 inter alia held
that AGR would include only the revenue from licence activities –
Challenged before Supreme Court in Union of India and another
v. Association of Unified Telecom Service Providers of India
reported as [2011] 14 SCR 657 wherein appeals by the Union of
India were allowed and the order dated. 30.08.2007 was set aside
– Telecom operators again approached TDSAT challenging the
demands – TDSAT by the impugned order considered the specific
head of items to be included/excluded under the definition of AGR
– Held: Contractual definition of gross revenue is binding – Gross
amount, as per the definition, is the gross revenue, without set-off,
is to be taken into consideration including the discounts given –
Licensees made futile attempt to submit that the revenue to be
considered would be derived from the activities under the licence;
whereas the aforesaid 2011 judgment between the parties holding
that the revenue from activities beyond the licence have to be
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   [2019] 16 S.C.R. 672
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included in adjusted gross revenue, is binding – Submission is also
that the contract recognises the applicability of accounting
standards – It is only to maintain books of accounts – When the
financial terms in the agreement are clear in the form of definition
of gross revenue governed by Clause 19.1 of the agreement, the
definition of Accounting Standard-9 (AS-9) cannot supersede it
which is a general one – Stand of Department of
Telecommunications (DoT) is apparent that the gross revenue has
been clearly defined in the agreement – Further, all discounts and
commission etc. form part of the gross revenue for the purpose of
payment of licence fee– Forex gain is also to be accounted for as
part of gross revenue – Further, stand of TDSAT is approved in
regard to assets/scrap, shares etc. – However, artificial bifurcation
of insurance claim made by the TDSAT cannot be accepted and is
contrary to contractual definition of gross revenue – Finding of
TDSAT to the extent it is contrary to revenue, set aside– Further,
amount of negative balance is a part of revenue and cannot be
deducted from the gross revenue to be worked out as per the
definition of gross revenue u/AS-9– Finding of TDSAT set aside –
Also, the entire amount received by the licensee on account of
sharing of passive infrastructure has to be counted in the gross
revenue while working out AGR – Contrary finding recorded by
TDSAT, set aside – Late fee is also included explicitly in the
definition of gross revenue and as such, it has to be computed as
its part – Finding of TDSAT, set aside – With respect to gains from
roaming charges and PSTN pass-through charges, the finding
recorded by TDSAT, to the extent it is contrary to the DOT, based
upon certain conditions, is set aside– Further, definition of gross
revenue is wide enough to cover non-refundable deposits –
Finding recorded by the TDSAT concerning non-refundable
deposits not being part of the revenue, set aside – With respect to
licence fee demand where spectrum is not granted, the finding
recorded by TDSAT in the case of Videocon & S. Tel is agreed with
– Interest and dividend earned from the licensing and non-licensing
activities also have to form part of gross revenue for determination
of licence fee – Further, in respect of the bad-debts written off,
the findings by TDSAT are appropriate – Interest income from inter-
corporate loan has to be included in the gr

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