SC asks govt, Vodafone to maintain status quo on OTSC demands, final hearing in February

The Supreme Court on Monday accepted the government’s suggestion to maintain status quo on fresh demands or recoveries between it and Vodafone Idea till the one-time spectrum charge (OTSC) case is finally decided in February.

Solicitor General Tushar Mehta suggested before a bench led by Justice Ashok Bhushan that the government needs to re-compute the demands and in the meantime status quo orders be passed “ with no fresh demands or payments by any side either” till the disposal of the case.

Senior Harish Salve, appearing for Vodafone Idea, accepted the suggestion, terming it “fair”.

The apex court noted the government’s proposal and posted the matter for final hearing in February.

However, the judges rejected the SG’s request to stay the TDSAT judgement as was done in the case of Reliance Communications and Loop Mobile (both undergoing insolvency proceedings).

Mehta said that “even the present case regarding liability to pay OTSC is the same as that in the RComm and Loop Mobile.”

The government has challenged a part of the TDSAT’s July 4, 2019 order that held as unsustainable the DoT demands for OTSC on spectrum allotted beyond start-up spectrum and up to the contracted limit of 6.2 MHz. Besides, setting aside the DoT demands for OTSC on spectrum allotted between 4.4 – 6.2 MHz, the TDSAT had also ruled that the government can charge OTSC only prospectively from January 1, 2013 (the date on which the government notified this decision) and that too only on administratively allocated airwaves beyond 6.2 Mhz.

After the TDSAT’s decision last year, the burden of OTSC for operators like Bharti Airtel and Vodafone Idea had come down by more than 60%.

According to the appeal, the government policies in the fast changing telecom and technology sectors are adopted and tailored from time to time based upon the circumstances and these policies were sometime recommended by an independent and specialised regulatory body Trai after open consultations with stakeholders. “That the respondents had not paid for the intrinsic value of the spectrum, a valuable natural resource held by the State in trust for the people of India (as held in the 2G Judgement). As such, such value had to be recovered in the public interest,” the appeal said.

DoT had levied the OTSC retrospectively from July 1, 2008 and raised a total demand of around Rs 25,000 crore on nine telcos in 2013 for spectrum held beyond 6.2 MHz. Vodafone Idea had moved the tribunal against the government for raising a demand for Rs 3,599.4 crore as the OSTC.

The decision to levy OTSC was taken by the UPA government in the wake of the SC in February 2012 cancelling 122 telecom 2G licences given by the then telecom minister A Raja. While the SC cancelled the licenses, because of the furore it created as these were given at 2001 rates of Rs 1,658 crore, that a charge was levied on spectrum allocated beyond the contracted amount.