AGR Verdict

AGR may be a fee-sharing mechanism between government and therefore the telcos United Nations agency shifted to ‘revenue-sharing fee’ model in 1999, from the ‘fixed license fee’ model. during this course, the telcos area unit speculated to share a share of AGR with the government.
The Supreme Court weekday upheld the Department of Telecommunications’ (DoT) definition of adjusted gross revenue (AGR), a contentious purpose among India’s medium players, and therefore the supply of a running battle between the government and trade for years. The ruling can have major ramifications for the medium firms, particularly the older service suppliers like Airtel and Vodafone plan.[i]

The Supreme Court on Fri (Feb 14) launched a critical attack on the Department of Telecommunications (DoT) for not taking any action or assembling one rupee from medium operators like Bharti Airtel and Vodafone idea India (VIL) on their adjusted gross revenue(AGR) dues.
A three-judge bench headed by Justice Arun Mishra expressed shock that the telcos – Vodafone plan and Bharti Airtel – had not paid any of their dues by the twenty-three January set by the court in its AGR judgment last Oct. Justice Mishra was livid, the language he was “literally shocked” that not a “single penny has been paid until date”, and asked for the initiation of contempt proceedings against the telcos. Reliance Jio is that the sole telephone company to possess paid up. The court was equally furious with the Department of medium for permitting the telcos to delay payments till the court finding of fact.


The bench’s unrelenting stand on the payment of dues is probably going to push Vodafone’s plan, which can cough up Rs fifty-three,000 large integers quickly, towards collapse. Bharti Airtel, which has over Rs thirty five000 large integer in dues, will raise the money needed. it’s building a war-chest to pay off the dues, having raised $250 million in perpetual bonds recently once garnering $3 billion in the Gregorian calendar month.

 AGR Meaning- Adjusted Gross Revenue

The Supreme Court has adjourned the hearing within the adjusted gross revenue(AGR) case June eighteen and asked the medium firms to file their replies on however they arrange to pay their remaining dues with the roadmap ahead. medium [ii]operators area unit needed to pay the license fee and spectrum charges within the variety of ‘revenue share’ to the Centre. The revenue quantity wont to calculate this revenue share is termed because of the AGR. in step with the DoT, the calculations ought to incorporate all revenues earned by a medium company – as well as from non-telecom sources like deposit interests and sale of assets. the businesses, however, are of the read that AGR ought to comprise the revenues generated from medium services solely and non-telecom revenues ought to be unbroken out of it.

Calculation of AGR

The revenue quantity wont to calculate this revenue share is [iii]termed because of the AGR. in step with the DoT[iv], the calculations ought to incorporate all revenues earned by a medium company – as well as from non-telecom sources like deposit interests and sale of assets.

A dispute regarding AGR-

The dispute between the telcos and therefore the government has been chiefly on the definition of AGR. the 2 sides were fastened during a legal battle over the definition of AGR for over a decade. whereas the government says that AGR includes all revenues from each medium yet as non-telecom services, the operators recommend that it ought to embody solely the revenue from core services. On October 24, 2019, the highest court widened the definition of AGR to incorporate the government’s read.

The Long History Of ADR Dispute

To provide relief to medium operators from the steep mounted license tax regime, the NDA government in 1999 gave AN choice to the licensees to modify the distribution fee model. beneath this regime, the mobile phone operators were needed to share a share of their AGR with the government as annual license tax (LF) and spectrum usage charges (SUC). License agreements between the Department of Telecommunications (DoT) and therefore the medium firms facilitate process the gross revenues of the latter.

AGR is then calculated once letting bound deductions wheat enter these license agreements. The low frequency and SUC were set at eight percent and between 3-5 percent of AGR severally, supported the agreement. The dispute between DoT and therefore the mobile operators have been chiefly on the definition of AGR. The DoT argued that AGR includes all revenues (before discounts) from each medium and non-telecom services.

The companies claimed that AGR ought to comprise simply the revenue accumulated from the core services and not dividend, interest financial gain, or profit on the sale of any investment or mounted assets. In 2005, the Cellular Operators Association of the Republic of India (COAI) challenged the government’s definition for AGR calculation. but the dispute over the definition of adjusted gross revenue (AGR) between the Department of Telecommunications and medium operators took an eventful flip in 2007-08.

In 2007-8, medium Disputes Settlement and Appellate assembly (TDSAT) had narrowed the scope of AGR. Following this, the then UPA government went into attractiveness. The Department of Telecommunications (DoT) challenged within the Supreme Court the TDSAT’s jurisdiction over the terms of the medium licenses that had earlier been accepted flatly by telcos. In an order dated day, the apex court laid-off DoT’s attractiveness and directed it to lift its contentions before the TDSAT.

At that point, A. Raja was the Union medium Minister, United Nations agency was later concerned in many controversies. The TDSAT once more reiterated its earlier findings. On August thirty, TDSAT accepted most of TRAI’s recommendations And passed an order that will apply to those AUSPI members that had enraptured the TDSAT with impact from the date once they filed their petitions. Industry body AUSPI and therefore the Cellular Operators Association of Republic of India (COAI) filed a review petition urging that the TDSAT order be created applicable to all or any members of the 2 bodies from the date of filing of their petition.
Following this, DoT once more went into An attractiveness on the recommendation of the law ministry that was headed at that point by Kapil Sibal.

DoT once more enraptured the Supreme Court against the August thirty TDSAT order. whilst the DoT attractiveness was unfinished before the apex court, some telcos filed petitions before TDSAT requesting to be enclosed within the tribunal’s August thirty order.
The Supreme Court on Oct eleven, 2011, controls that TDSAT’s August thirty, 2007, order ought to be put aside. It allowed licenses to challenge any demand before TDSAT, which might enter the deserves of the claim and judge whether or not it was following the license agreement and in consonance with the AGR definition. All medium licensees enraptured the TDSAT difficult the idea of DoT’s license fee demand.

In 2015, the TDSAT stayed the case in favor of medium firms and control that AGR includes all receipts except capital receipts and revenue from non-core sources like rent, profit on the sale of mounted assets, [v]dividend[vi], interest, and miscellaneous. As a matter of reference, the case would be equivalent to say that of AN aluminum plant. The excise might have claimed that the worth of a friend and lake got to be a part of the assessable value[vii]. the price of land, workers, etc. all be a part of the ultimate price of every weight unit of aluminum. However, setting aside TDSAT’s order, Supreme Court on October 24, 2019, upheld the definition of AGR as stipulated by the DoT.

Fight of AGR

The fistfight between DoT and therefore the medium firms have been on since 2005, once the Cellular Operators Association of Republic of India — the lobby cluster for players like Airtel and Vodafone plan — challenged the DoT’s definition for AGR calculation. afterward, in 2015, the TDSAT dominated that the AGR enclosed all receipts, except capital receipts and revenue from non-core sources like rent, profit on the sale of mounted assets, dividend, interest, and miscellaneous financial gain, etc.

The government, meanwhile, continued to lift the difficulty of under-reporting of revenues to duck charges. The accountant and Auditor General of Republic of India (CAG), during a recent report, curst the medium firms for “understating revenues” to the tune of Rs sixty-one,064.5 crores. the most recent petition by the DoT was being detected within the Supreme Court, whereby the DoT wanted interest, penalty, and interest on penalty on the outstanding quantity. These amounted to Rs ninety-two,641 large integers (disputed actual demand is Rs twenty-three,189 crores, levy of Interest of Rs forty-one,650 crores, the penalty of Rs ten,923 large integers and interest on penalty of Rs16,878 crore).

All the appeals against the TDSAT order dated Apr twenty-three, 2015, aboard multiple appeals and verdicts by the DoT and therefore the trade-in numerous forums as well as High Courts and therefore the Supreme Court of Republic of India, were detected before the Bench of Justice Arun Mishra, Justice S Abdul and Justice Mr. Shah of Iran. The bench delivered the decision weekday and effectively upheld the definition of AGR calculation as stipulated by the DoT. that’s unhealthy news for AN already beleaguered medium sector, which might have to be compelled to cough up the unfinished payments.


The matter has been beneath judicial proceeding for fourteen years with operators controversy that AGR[viii] ought to comprise revenue from medium services, however DoT demand that AGR ought to embody all revenue earned by AN operator, as well as that from non-core medium operations.
The battle started once telcos migrated to a new system offered by the government in 1999 beneath that operators in agreement to share bound share of revenue with the government.


  • [i] The process of taking legal action.
  • [ii] An agency or means of doing something.
  • [iii] The distribution of revenue.
  • [iv] Department of telecommunication.
  • [v] A useful or valuable thing or person.
  • [vi] A sum of money paid regularly, by a company to its shareholders out of its profit.
  • [vii] The value upon which various duties and taxes are levied.
  • [viii] Adjusted gross revenue.

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