The Bombay High Court on Monday provided significant relief to cellular service operators Bharti Airtel and Vodafone Idea by quashing the central government's one-time spectrum charge. This levy had been imposed unilaterally in 2012, with retrospective effect from 2008. The division bench of Justices Manish Pitale and Shreeram Shirsat ruled that the government cannot retrospectively alter the financial terms of telecom licences years after they had been granted.
Background of the Case
The telecom operators had paid for the spectrum under a revenue-sharing regime as per the New Telecom Policy 1999 (NTP 1999). The court observed that introducing an additional charge years later effectively changed the original deal. The government failed to justify its action for imposing a one-time spectrum charge retrospectively. The bench also set aside the consequential demand notices issued to the telecom operators and directed authorities to return the bank guarantees that had been furnished following interim orders. It was later disclosed that the cumulative retrospective demands for the two companies exceeded Rs 6,000 crore.
Arguments Presented
The levy, imposed by the Department of Telecommunications, applied to spectrum holdings beyond 6.2 MHz and was made retrospectively applicable from July 1, 2008. Senior counsel Harish Salve, representing Airtel, and senior counsel Aspi Chinoy, representing Vodafone, argued that the levy was against legal principles and contractual arrangements. The High Court agreed, holding that the government could not unilaterally rewrite the financial terms after the operators had accepted and acted upon them.
Anil Singh, the additional solicitor general, argued that the charge was justified for 'revenue maximisation' in the public interest. However, the court countered that what constitutes public interest depends on the facts and circumstances of each case. It noted that the Centre had unilaterally imposed the levy without any identifiable source of power in the terms and conditions of the contract or relevant statutory provisions.
Implications of the NTP-99
Under NTP-99, the basis of payment of the licence fee underwent a radical change, with the licence fee being stipulated on a revenue-sharing basis. The operators were also required to pay specific amounts for using the spectrum, again based on revenue sharing. The court emphasised that the government could not unilaterally alter these terms retrospectively.
