SC Stays TDSAT Order Which Set Aside DoT Demand For License Fee From Internet Service Providers

The Supreme Court on Tuesday stayed the order of the Telecom Disputes Settlement Appellate Tribunal(TDSAT) which directed the Union of India to refund the amounts collected from Internet Service Providers as license fee. The bench headed by Justice D. Y. Chandrachud was hearing the Centre's statutory appeal under section 18 of the TRAI Act, 1997 against the 18.10.2019 decision of the TDSAT, New Delhi whereby the Tribunal has allowed the petition of the internet service providers and has set aside the license fee demands made by the Department of Telecommunications (DoT) as per the new concept of Adjusted Gross Revenue.The bench admitted the appeal and listed the same for hearing in the last week of April. The bench also clarified that in the event the appeal succeeds, the ISPs should be prepared to pay the amounts."You are not being asked to pay today. But should the UOI succeed in the appeal, there should be provision at your end to make the payment", said Justice Chandrachud to the respondent-service providers."Initially, the internet was not the 'in' thing, back in 1998. So incentives in the form of no license fee were offered for people to come and also motivate others to join the sector. Long-term license agreements of 10 to 15 years were entered into. After it became a competitive field, the regime has changed. Now, the people are charged licence fee on the AGR. The old people, though not required to pay any licence fee during the tenure of the agreement, will be granted renewal only with the license fee. The problem is that while the old people continue to not pay, the new people said that there is no level-playing field because they have to pay the license fee. The tribunal, in the impugned order, has said that the government may neither recover license fee from the old ones nor from the new ones", began SG Tushar Mehta."This concerns all service providers and needs Your Lordships' examination. If we succeed, the government will be entitled to recover some 4300 odd crores", he pressed.It may be noted that on 01.05.2014, TRAI submitted its recommendations on definition of AGR in Licence Agreement for provision of Internet Service and minimum presumptive AGR. TRAI has recommended for a uniform licence fee of 8% of the AGR application for all ISP and ISP-IT licences. Revenue for the purpose of licence fee for both these categories shall include all types of revenue from internet services allowing only those deductions available through pass-through charges and taxes/levies as in the case of Access Services, without any set-off for expenses. Revenue from internet services shall also be included in the definition of AGR. It is the common case of the parties that the Government has so far not taken any decision on the above recommendation of TRAI.It is also not in dispute that later in July, 2014, TRAI issued a Consultation Paper on definition of Revenue Base (AGR) for different types of service licences including for UL ISP Licence and has submitted its recommendations on 06.01.2015 which is also pending.Senior Advocate Mukul Rohatgi, for the respondent Sify Technologies, advanced that the position of some old licensees is that the revenue from internet service is not to be charged for the purpose of computing the license fee. He pointed out that some of these old licenses will continue till 2028. "There are two recommendations. Six years have passed and the government still has not deliberated on them. After 2028, the old licences can end and all can have a level playing field. Why hasn't the government taken a call for six years?"If someone is charging Re.1 and we are charging Rs.5, why would anyone come to us?", he asked.Senior Advocate Arvind Datar, appearing for the Internet Service Providers' Association of India, also advanced that while the May 1, 2014 recommendation is in respect of the old licensees, the January, 2015 recommendation is for the new ones. "If the recommendations are considered, no appeal would even be needed", he said."It will still apply prospectively", countered Mr. Mehta. "But you have not decided in the last six years...", pointed out Justice Chandrachud."These recommendations are still engaging your attention?", asked Justice Chandrachud. "No. Now there is a new regime", replied the SG."Our difficulty before the TDSAT was that the stay was not in favour of the government. If we finally succeed, they cannot say that 'the amount is so high, how can we pass it on to the end consumers'", continued the SG"You are not being asked to pay today. But should the government succeed, there should be provision at your end to make the payment", said Justice Chandrachud to the respondents.Mr. Datar argued that it affects their banking and loan capacity, while the SG refuted this claim.Ultimately, the bench proceeded to list the matter for final hearing in April.The Centre's appealSince 1998, Licenses have been issued under different regimes for the purpose of providing Internet Services,...

SC Stays TDSAT Order Which Set Aside DoT Demand For License Fee From Internet Service Providers

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