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Supreme Court Says Self-Assessment of AGR Dues Won't Be Allowed, All Dues Must Be Paid

Professor of Financial Economics and Part-time Value Investor, Transfin.
Mar 18, 2020 9:41 AM 3 min read

Today, a three-judge bench of the Supreme Court held that no further objections would be allowed against payable dues of telecom companies. Additionally, it said that no self-assessment by the companies themselves would be entertained.


However, the apex court also said that it would consider the Solicitor General’s plea seeking reasonable time on the next date.


“All dues as per our judgement will have to be paid, including interest and penalty. The Solicitor General had filed a plea seeking reasonable time, we will consider this plea on the next date,” the court order stated.



The Supreme Court of India on October 24th 2019 gave its Adjusted Gross Revenue (AGR) judgement and said that the definition of AGR includes all revenues as announced by the Department of Telecommunications (DoT).


The telecom companies' abilities, including interest and penalties, was estimated at ₹1.3Lcr ($17.5bn). Of this, Bharti Airtel’s AGR dues stood at ₹40,000cr ($5.4bn) while Vodafone Idea’s AGR dues were pegged at ₹53,000cr ($7.15bn). Tata Teleservice had ₹14,000cr ($1,939m) in dues. Reliance Jio, meanwhile, has already cleared its AGR dues.


It was widely expected that several companies could file for bankruptcy considering the huge amounts they owed the Government, especially Vodafone Idea, which has been posting losses in its quarterly results for some time now.  


The SC had set January 23rd as the deadline for settling all AGR dues. However, except Reliance Jio, no other telecom company paid any dues to the Government. The final notice for clearing the AGR dues was issued to the remaining telecom companies on February 14th. The companies were expected to clear the AGR dues by February 17th.


Self-Assessment of AGR Dues by the Telcos

As per “self-assessments” of AGR dues by telecom companies, they owe the Government much lesser than what it has demanded. For instance, Bharti Airtel has pegged the AGR dues it owes the Government at ₹13,000cr ($1.75bn) and does not see them exceeding ₹18,000cr ($2.42bn). 


Tata Teleservices, meanwhile, has said that it owed only a fraction (₹2,197cr ($304m)) of the ₹14,000cr ($1,939m) the Government is demanding in AGR dues.


Vodafone Idea, a few days ago, said it had made an additional ₹3,354cr ($453m) payment towards its adjusted gross revenue (AGR) dues, bringing its total amount paid to ₹6,854cr ($926m).The company claims it has now paid the full principal amount as per its self-assessment of dues.


The Road Ahead

The SC’s verdict today is another slap on the wrist for telcos. With their self-assessment claims rejected, they are now required to pay the entirety of their dues. This will further strain an already overburdened telecom sector. Telcos have increased data tariffs on consumers to meet the excess debt burden, and Vodafone has warned that it may be forced to terminate its India business altogether.


The only silver lining right now for telecom companies is the SC’s consent to hearing the plea to give them “reasonable time” to clear their dues. This hearing will take place in three weeks, and if the court agrees to give telcos more time, it may give them some amount of much-needed relief.


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