Allowed

Megha Channel v. Channel Plus

TDSAT30 Apr 2010BROADCASTING PETITION/110/2006

Case brief

AI extract

What is this about?

The Tribunal held that the Department of Telecommunications must calculate annual license fees on an accrual basis as per previous judgments, refusing the arbitrary switch to an 'actually paid' basis. The court ordered a refund of excess dues paid by Bharti Airtel Limited.

What did the court decide?

Petitioner ordered to pay on accrual basis; excess amount lying with Respondent to be refunded with interest at 12% per annum.

Megha Channel vs Channel Plus — Writ and Judicial Review | TDSAT (2010)

¶1

TELECOM DISPUTES SETTLEMENT & APPELLATE TRIBUNAL NEW DELHI

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Dated 4^th March, 2010

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Petition No.244 of 2009 (M.A. No. 150 of 2009)

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Bharti Airtel Limited & Anr. … Petitioner

¶5

Versus

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Department of Telecommunications (DoT) … Respondent

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BEFORE:

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HON’BLE MR. JUSTICE S.B.SINHA, CHAIRPERSON HON’BLE MR. G.D. GAIHA, MEMBER

¶9

For Petitioner

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: Mr.Ramji Srinivasan, Sr.Advocate with Mr. Kaushik Mishra, Advocate

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For Respondent

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: Mr. Vineet Malhotra, Advocate Mr. Shankar Chabra, Advocate Mr. Anurag Sharma, Advocate

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JUDGMENT

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S.B. Sinha

¶15

These two petitioners Bharti Airtel Limited and Bharti Hexacom Limited are

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before us questioning inter alia the legality of an order dated 17.9.2009 issued by

¶17

the respondent herein and the reminders issued in relation thereto being dated 7.10.2009 and 29.10.2009.

¶18

¶19

The said Order dated 17.9.09 reads as under:-

¶20

“Sub: Re-assessment of annual License fee for the financial year

¶21

2005-06 in respect of your CMTS license for A.P., Chennai, Delhi, Gujrat, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra, Mumbai, Punjab, Tamil Nadu, UP (West), Rajasthan and N.E. licensed Service Areas.

¶22

Ref: This office letter of even no.dated 17.05.2008

¶23

This concerns re-assessment of annual License Fee for the financial year 2005-06 in respect of the CMTS License of M/s Bharti Airtel Ltd. for the license service areas of A.P., Chennai, Delhi, Gujrat, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra, Mumbai, Punjab, Tamil Nadu, UP(West), Rajasthan and N.E.

¶24

As per the extant license agreement, deductions from the Gross Revenue on account of (a) PSTN related call charges (Access charges) actually paid to other eligible/entitled telecom service providers within India and (b) Roaming charges actually paid to other operators, during the financial year are admissible.

¶25

¶26

You were directed to submit the duly audited quarter-wise operator-wise details of PSTN related call charges and Roaming charges actually paid to eligible/entitled telecom operators during the financial year 2005-06.

¶27

On submission of the requisite details by you, the re-assessment of annual License Fee for the financial year 2005-06 has been carried out after going through the Audited quarter-wise, operator-wise details of pass through charges and Roaming charges actually paid to other Telecom Services providers. The summary of the re-assessment

¶28

is as under:

¶29

Service Area	AGR	Revenue Share Due	Revenue Share Paid	Difference (C-D)	Interest on delayed payment calculated up to 30.09.2009	Total dues
AP	6363311647	509064932	507297002	1767930	1502876	3270806
Chen.	4883036567	488303657	479771258	8532399	6745475	15277874
Delhi	16125650624	1612565062	1546071590	66493472	41953225	108446697
Guj	2283446076	228344608	221059736	7284872	4439101	11723973
Har.	1370247685	109619815	110966080	-1346365	12101	-1334164
HP	1223407512	61170376	61767233	-596857	61953	-534904
Ktka	11525415321	922033226	948598655	-26565429	240556	-26324873
Ker.	1680892919	134471434	134854806	-383372	48992	-334380
Kol.	2559415852	255941585	253172646	2768939	2072949	4841888
Mah.	4019336042	401933604	402526999	-593395	5547	-587848
MP	3034634275	243699691	230832931	12866760	7958976	20825735
Mum.	5169708357	516970836	525685756	-8714920	232380	-8482540
Punjab	6615510082	396930605	399361720	-2431115	41491	-2389624
T.N.	2788265428	278826543	278811395	60115148	5142610	11157758
UP(W)	1684662404	134772992	134739393	33599	487356	520955
Raj.	3280897466	196853848	196991889	-138041	737086	599045
N.E.	75074233	3753712	3874434	-120722	4213	-116509

¶30

E&OE

¶31

Total amount payable: Rs.17,66,64,731/-

¶32

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(Rs.Seventeen Crores sixty six Lakhs sixty four thousand seven hundred thirty one only)

¶34

The above amount is due after calculating interest up to 30.09.2009. It may be noted that there is an excess of Rs.13,34,164/5,34,904/-, 2,63,24,873/-, 3,34,380/-, 5,87,848/84,82,540/-, 23,89,624/- and 1,16,509/- in respect of Haryana, H.P., Karnataka, Kerala, Mah, Mumbai, Punjab and North East licensed service areas respectively. The excess amounts so arrived at will be adjusted against the future dues in respect of the same Licensed service area, if not adjusted earlier.

¶35

The calculation sheets containing computation of the AGR and interest amount are annexed to this letter. You are directed to remit the sum of Rs.17,66,64,731/-. (Rs.Seventeen Crores sixty six Lakhs sixty four thousand seven hundred thirty one only) forthwith.

¶36

You are also directed to submit the auditor’s note stating that

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the deductions claimed on account of PSTN related call charges and Roaming charges include/do not include Port Charges and Leased Line charges actually paid to other operators during the year 2005-06.

¶38

¶39

If these are included, audited details of the same may also be provided.”

¶40

Along with the said demand, several sheets had been annexed directing the petitioners to make payments of the Adjusted Gross Revenue (AGR), in respect of

¶41

service areas of Andhra Pradesh, Karnataka, Punjab, Chennai, Delhi, Gujarat, Haryana, Himachal Pradesh, Kerala, Calcutta, Maharashtra, Madhya Pradesh, U.P. (West), Mumbai and Tamil Nadu Service Areas and so far as the petitioner no. 2 is concerned, the service areas of Rajasthan and North East.

¶42

The petitioners herein are licensees; the licenses having been granted by the respondent in terms of the provisions of Section 4 of the Indian Telegraphs Act, 1885 (1885 Act).

¶43

Indisputably, pursuant to or in furtherance of a migration package offered to the petitioners by the respondent herein and they having accepted the same, the license fees were required to be calculated on Adjusted Gross Revenue (AGR) basis and was only payable on revenue accruing under the licenses.

¶44

The respondent included in licensing activities, while computing the amount of AGR, however, included earnings from revenue, which according to the petitioner had not accrued from the telecommunication activities. It gave rise to a

¶45

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dispute by and between the petitioner No. 1 and the respondent as according to the letter it was entitled to calculate the license fees on a revenue sharing basis, “as it thinks fit”. The petitioner No. 1 filed a petition before this Tribunal marked as Petition No. 82 of 2005 challenging the mode of calculation of the license fees by the respondent under the agreement. Indisputably, the Cellular Operators Association of India (COAI) and Association of Unified Access Service Providers of India (AUSPI) and various other operators also filed similar applications.

¶47

By reason of a judgment and order dated 7.7.2006, this Tribunal held as under:-

¶48

“in our opinion, it would be doing violence to the section if we are to accept the argument of the learned counsel for the 1^st respondent that words “as it thinks fit” found in the proviso would allow the government to demand and collect a share of revenue from all the activities of the licensee irrespective of the fact whether such revenue

¶49

is traceable to the revenue realized from the activities under the license or not……we are of the opinion that we do not think in the migration package the government had indicated that it would be demanding a percentage of share even in the unlicensed activity of the company. We have already noticed Section-4 of the Telegraph Act does not permit such a demand…… We think it more appropriate that

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the matter should be remanded to the TRAI which is the 3^rd respondent herein, before whom the government should produce the material relied by it while rejecting TRAI’s recommendation so that TRAI can consider the same and send its conclusions to this Tribunal and thereafter, this Tribunal will have the benefit of a comprehensive recommendation of the TRAI after considering the materials relied upon by the government”

¶52

It is not in controversy that the said judgment has attained finality. The respondent preferred an appeal thereagainst before the Supreme Court of India which was dismissed by an order dated 19.1.2007 holding as under:-

¶53

“Heard the parties.

¶54

Pursuant to the direction of the TDSAT in the impugned order, a fresh recommendation has been made by the TRAI. In view thereof, we see no reasons to interfere. The appeal is dismissed. The appellant is, however, given liberty to urge all the contentions raised in this petition before the TDSAT.”

¶55

Pursuant to or in furtherance of the observations and directions issued by

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this Tribunal, in its judgment dated 7.7.2006, the Telecom Regulatory Authority of India (TRAI) made recommendations on different components of revenue

¶57

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generated from it which should form part of the AGR and which should not form part thereof.

¶59

The said recommendations were considered by this Tribunal in its judgment dated 30.8.2007. This Tribunal accepted the recommendations made by TRAI. We would refer to the relevant portions thereof a little later.

¶60

The petitioner No. 2 thereafter filed a petition before this Tribunal which was disposed of by an order dated 31.10.2007 (marked as Petition Nos. 289 & 292 of 2007).

¶61

By Orders dated 23.10.2007 and 31.10.2007, this Tribunal upheld its earlier judgment.

¶62

By a communication dated 17.5.2007 the respondent asked the petitioner to furnish duly audited detailed account in respect of PSTN relating to payments

¶63

made to the operators pursuant whereto calculations were provided on actually paid basis, in the following terms:-

¶64

“Sub: Assessment of annual License fee for the financial year 2005-06 in respect of your CMTS license for A.P., Chennai, Delhi, Gujrat, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra, Mumbai, Punjab, Tamil Nadu, UP (West), license Service Areas.

¶65

¶66

This concerns re-assessment of annual License Fee for the financial year 2005-06 in respect of the CMTS License of M/s Bharti Airtel Ltd. for the license service areas of A.P., Chennai, Delhi, Gujrat, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra, Mumbai, Punjab, Tamil Nadu, UP(West) license service areas. The following documents – Audited Annual Accounts, Statement of Revenue and License Fee, Reconciliation statements for the financial year 2005-06 and other related documents submitted by the Licensee have been taken into consideration for the assessment.

¶67

The summary of the re-assessment is as under:

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Service Area	AGR	Revenue Share Due	Revenue Share Paid	Difference (C-D)	Interest on delayed payment calculated up to 31.05.07	Total dues (+)/ excess (-)
AP	6266378170	501310254	507297002	-5986748	51670	-5935078
Chen.	4771173098	477117310	479771258	-2653948	138789	-2515159
Delhi	15416862657	1541686266	1546071590	-4385324	0	-4385324
Guj	223956695	222395670	221059736	1335934	495700	1831634
HP	1204128403	60206420	61767233	-1560813	12526	-1548287
Haryana	1344519786	107561583	110966080	-3404497	0	-3404497
Ktka	11410610913	912848873	948598655	-35749782	18089	-35731692
Ker.	1648347467	131867797	134854806	-2987009	7152	-2979856
Kol.	2506426758	250642676	253112000	-2469325	129007	-2340318
M.P.	2869803528	229584282	230832931	-1248649	27558	-1221090
Mah.	3948435984	394843598	402526999	-7683401	0	-7683401
Mum.	5207917709	520791771	525685756	-4893985	125082	-4768903
Punjab	6606785216	396407113	399361720	-2954607	17805	-2936802
T.N.	2665965152	266596515	272811395	-6214880	136386	-6078494
UP(W)	1669037183	133522975	134739393	-1216418	14442	-1201976

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E&OE

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The calculation sheets for computation of the AGR and interest

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amounts are annexed to this letter. It may be noted that there is an excess of Rs.5935078/-, Rs.2515159/- Rs.4385324/- Rs.1548287/-,

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Rs.3404497/-, Rs.35731692/-, Rs.2979856/-, Rs.2340318/-, Rs.1221090/-, Rs.7683401/-, Rs.4768903/-, Rs.2936802/-, Rs.6078494/- and Rs.1201976/- against A.P., Chennai, Delhi, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra, Mumbai, Punjab, T.N. and UP(West) license service areas respectively, which will be adjusted against the future License Fee dues of the concerned license service areas on receipt of the details mentioned in Para 7 below and consequent re-assessment of License Fee dues thereafter. It may also be noted that amount of Rs.1831634/- outstanding against Gujrat license service area is due after calculating interest up to 31.05.2007.

¶74

Attention is invited to Auditor’s report on Statement of Revenue & License Fee Annexure-I, Para 3(a) and 3(c) of notes to the Statement of Revenue & License Fee for different quarters of theFY 04-05 for A.P. licensed service area:-

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Para 3(a) – “The operator wise revenue share access charges and roaming revenues actually passed on to other service providers have been prepared based on management estimates as segregation of the same is not readily retrievable from the books of account of the circle.”

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Para 3(c) – “Call revenue has been segregated into call revenue within the service area, national long distance call revenue and international long distance call revenue based on call traffic

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pattern information available with the management. Accordingly, the segregated revenue figures based on such estimation in the statement may not be accurate.”

¶79

Observation of similar nature has been made in the Auditor’

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report on Statement of Revenue and License Fee for the FY 05-06 in respect of all the licensed service areas of M/s Bharti Airtel Ltd. (A.P., Chennai, Delhi, Gujrat, H.P., Haryana, Karnataka, Kerala, Kolkata, M.P., Maharashtra, Mumbai, Punjab, Tamil Nadu and UP(West).

¶81

In view of Para 4 and 5 above, a fresh auditor’s report is required to be submitted for each of the licensed Service Areas.

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In addition to the above you are directed to furnish the following details and clarifications:

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(i) Duly audited quarter-wise operator-wise details of (a) PSTN related call charges (Access charges) actually paid to other eligible/entitled telecom service providers within Indian and (b) Roaming charges actually paid to other operators, during the financial year 2005-06.

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(ii) Duly audited quarter wise details of rebates, discount and waivers, other than those agreed to with customers as per Tariff Plans filed with the TRAI.

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(iii) Duly audited quarter-wise details of sales tax and service tax billed/collected/paid are required to be submitted.

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(iv) Profit on sale of assets on gross basis i.e. without any set off.

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In the absence of adequate disclosures as above the present assessment of License Fee for the financial year 2005-06 is to be taken as provisional.

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In case the above details and clarifications are not received

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within 30 days of the issue of this letter, the deductions already

¶91

¶92

admitted will be disallowed and License Fee and interest will be reassessed and supplementary demand shall be issued.

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The Auditor’s report on statement of revenue and License Fee clearly stating that the statement has been prepared in accordance with norms/guidelines contained in the License Agreement is to be submitted.

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You are directed to make the payment of principal plus interest calculated up to 31.05.2007 amounting to Rs.18,31,634/- (Rupees Eighteen lakh thirty one thousand six hundred thirty four only) in respect of Gujrat license service area forthwith.”

¶95

The respondent also directed the petitioner furnish details of sales tax and service tax as well as profit on sale of assets on gross revenue basis as also the interest calculated upto 31.5.2007 amounting to almost Rs.18 lakhs.

¶96

Indisputably, the Supreme Court of India on appeals having been preferred from the orders of this Tribunal dated 30.8.2007 passed a limited order of stay i.e., “no adjustment shall be made in the mean time”.

¶97

Whereas the Department of Telecommunications contends that the said order amounts to stay of the operation of the judgment of this Tribunal; according

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¶99

to the petitioners, the same would amount to an order of status quo in terms whereof, the respondent was divested of its jurisdiction to reopen the assessment of AGR.

¶100

Indisputably, relying on or on the basis of the said order of the Supreme Court of India, the interim order of this Tribunal dated 23.10.2007 was prayed for being recalled in terms of an application filed by the respondent which was dismissed by an order dated 13.3.2009, stating—

¶101

“In the present case, the interim order was passed by this Tribunal on 31.10.2007 regarding which prayer for recall is being made by way of present application. The ground on which recall is sought is the order of the Supreme Court which only says no adjustments shall be made. The Supreme Court has not granted the prayer of present applicant i.e., applicant in S.L.P. for stay of order dated 7.3.2008, wherein this Tribunal has already considered effect of Supreme Court's order.

¶102

Thus, it will be seen that the interim orders passed by the Supreme Court in this matter is similar and is to the effect that no adjustments shall be made. By filing the present

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application for recall of the order dated 31.10.2007, the applicant is re-agitating the same issue which has been fully considered and rejected by the Tribunal in its order dated 7.3.2008 referred to above. We see no reason to take a different view. The application is dismissed.”

¶105

The impugned demand was made thereafter. It was made on ‘actually’ paid basis. We have noticed hereinbefore that the notice of demand pertains to 17 Circles, out of which 15 Circles are in respect of the first petitioner; whereas the other two Circles being Rajasthan and North East, pertain to the licenses granted to petitioner No. 2. The demand raised as against the petitioner No. 2 was Rs. 599045 + Rs. (-) 116509 only.

¶106

Aggrieved by and dissatisfied with the said order dated 13.3.2009, the respondent filed a Special Leave Petition (SLP) wherein an order of stay was passed on 7.12.2009. An application for modification of stay was filed by the petitioner before the Supreme Court of India and by an order dated 7.12.2009, the order of stay was modified to the extent that the petitioner would pay on the existing basis.

¶107

The respondent, as the petitioners have demonstrated, had been taking inconsistent and contradictory stands in regard to the method of accounting.

¶108

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It had applied two different yardsticks in the same financial year, i.e., ‘accrual’ and ‘actually paid’ basis for calculating the amount of license fee, as would be evident from the following examples :

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CHART FOR KARNATAKA CIRCLE (PSTN) FOR THE YEAR 2005-06

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Quarter	As per DoT Demand Notice (in Rs.)	Calculations on accrual basis by the petitioner (in Rs.)	Calculations on actual basis by the petitioner (in Rs.)	Remarks (Method adopted by DoT) (in Rs.)
Q-1	56,05,00,703	56,05,00,703	55,14,77,512	Actually paid basis
Q-2	56,91,25,540	56,91,25,540	57,58,10,766	Accrued basis
Q-3	63,41,93,036	63,41,93,036	64,74,11,370	Actually paid basis
Q-4	70,46,65,058	70,46,65,058	66,94,79,023	Actually paid basis

¶112

CHART FOR KARNATAKA CIRCLE (ROAMING) FOR THE YEAR 200506

¶113

Quarter	As per DoT Demand Notice (in Rs.)	Calculations on accrual basis by the petitioner (in Rs.)	Calculations on actual basis by the petitioner (in Rs.)	Remarks (Method adopted by DoT) (in Rs.)
Q-1	13,89,82,354	13,89,82,354	14,70,43,520	Actualbasis
Q-2	13,65,41,938	13,65,41,938	15,07,12,608	Accrualbasis
Q-3	16,60,57,520	16,60,57,520	17,28,98,863	Actualbasis
Q-4	16,89,48,930	16,89,48,930	17,28,98,863	Actualbasis

¶114

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CHART FOR ANDHRA PRADESH CIRCLE (PSTN) FOR THE YEAR 2005-06

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Quarter	As per DoT Demand Notice (in Rs.)	Calculations on accrual basis by the petitioner (in Rs.)	Calculations on actual basis by the petitioner (in Rs.)	Remarks (Method adopted by DoT) (in Rs.)
Q-1	26,96,63,084	26,96,63,084	24,63,89,452	Accrualbasis
Q-2	25,45,50,872	25,45,50,872	26,16,41,800	Actual basis
Q-3	32,10,46,591	32,10,46,591	29,93,67,236	Accrualbasis
Q-4	38,09,19,929	38,09,19,929	34,76,20,705	Accrualbasis

¶117

CHART FOR ANDHRA PRADESH CIRCLE (ROAMING) FOR THE YEAR 2005-06

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Quarter	As per DoT Demand Notice (in Rs.)	Calculations on accrual basis by the petitioner (in Rs.)	Calculations on actual basis by the petitioner (in Rs.)	Remarks (Method adopted by DoT) (in Rs.)
Q-1	4,75,39,912	4,75,39,912	4,21,04,637	Accrualbasis
Q-2	3,99,77,136	3,99,77,136	4,47,08,790	Actual basis
Q-3	4,98,73,343	4,98,73,343	5,03,35,687	Accrualbasis
Q-4	5,31,25,687	5,31,25,687	5,26,45,385	Accrualbasis

¶119

Mr. Ramji Srinivasan, the learned senior counsel appearing on behalf of the petitioners, would urge:-

¶120

(i) The respondent should not have raised a demand on ‘actual basis’ in stead and place of ‘accrual’ basis upon making re-assessment of license fee or otherwise.

¶121

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(ii) Various components of calculation of license fee which had been excluded in terms of the judgment of this Tribunal dated 30.8.2007 could not have been the subject matter of assessment of the license fee.

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(iii) Adoption of two different yardsticks for revenue and expenditure is arbitrary in nature.

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(iv) The respondent is bound by the judgment of this Tribunal.

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Mr.Vineet Malhotra, the learned counsel appearing on behalf of the respondent, on the other hand, submitted:-

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(i) The order of stay passed by the Supreme Court of India must be held to mean that the judgment of this Tribunal was not in force.

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(ii) Re-assessment of AGR had been made in terms of the terms and conditions of the license.

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(iii) The judgment of this Tribunal having been rendered on 30.8.2007, the petitioners are not entitled to any relief as the re-assessment of AGR relates to the F.Y. 2005-06.

¶129

This Tribunal, in its judgment dated 30.8.2007 passed in Petition No. 7 of 2003 including Petition No. 82 of 2005, inter alia, held as under:-

¶130

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15. Inclusion of items of revenue on accrual basis but exclusion of items of cost on actual payment basis.

¶132

The petitioners are at pains to point out inconsistency and unfairness

¶133

in following the practice of taking into consideration revenue on accrual basis while costs are allowed to be deducted on actual payment basis. To demonstrate this it was contended that service tax is included in the revenue on accrual basis but deduction is allowed only on actual payment. This results in difference between revenue booked and deductions made. As a result of this most service providers end up paying licence fee even on the uncollected portion of the service tax. DoT has supported the existing practice. The Authority concluded that service tax is not a revenue for the service provider but service provider is only a collecting agency on behalf of the Government. The inclusion and exclusion on this item should be on accrual basis. The Authority recommended that service tax should be shown on accrual basis both for inclusion and exclusion for the purpose of AGR. It also recommended that interconnection usage are also to be shown on accrual basis both for inclusion and exclusion from the gross revenue for purpose of AGR. We find no reason to differ with the view of the Authority on this point. The recommendation of the Authority is, therefore, affirmed.”

¶134

¶135

Indisputably, some of the items for the purpose of re-assessment of annual license fee considered by the respondent include the items which, according to this

¶136

Tribunal could not have been taken in to consideration being outside the scope of telecommunication activities.

¶137

From the following chart, it would furthermore appear that the impugned

¶138

demand is contrary to the order of this Tribunal dated 30.8.2007:-

¶139

“Comparative Chart Showing Impugned Demand is Contrary to the TDSAT Judgment dated 30.8.2007

¶140

Component of Demand	Covered by TDSAT Judgement dated
	30.8.2007
Revenue earned from interconnect usage	It also recommended that
charge	interconnection usage are also to be
	shown on accrual basis both for
	inclusion and exclusion from the gross
	revenue for purpose of AGR. We find
	no reason to differ with the view of the
	Authority on this point. The
	recommendation of the Authority is,
	therefore, affirmed.

¶141

¶142

Revenue from Foreign exchange	According to the TRAI impact of
fluctuations, disincentives and waivers.	foreign exchange fluctuations, whether upward or downward, on AGR must be ignored. Foreign exchange fluctuation is a contingency which has impact on
	every business which may have something to do with foreign exchange. Fluctuations in foreign exchange rates have nothing to do with licensed activity of telecom service providers. Union of India, however, submits that incomes accruing on account of foreign exchange fluctuations and which
	are accounted for in the income
	statements of the licensee form part of
	the revenues and hence are subject to levy of license fee by treating it part of
	AGR. We are unable to accept this.
	Foreign exchange fluctuations do not
	arise from licensed activity and,

¶143

¶144

	therefore, need not be included in
	AGR. Secondly, the Union of India
	does not say anything whether they
	will permit deduction from AGR if
	loss occurs on account of such
	fluctuations. We affirm the recommendation
	of TRAI on this point.
Bad debts, waivers, discounts	Bad debts, waivers or discounts are
	actual monies lost by the service
	provider. Therefore, such losses have
	to be excluded from AGR. Allowing
	amounts on account of such losses to be included in AGR would mean that while
	the party incurs loss it has to pay licence
	fee on the loss also. The
	recommendation of TRAI in this behalf
	is, therefore, set aside and we recommend thatitems under this head
	have to be excluded from AGR.

¶145

¶146

Inclusion of items of revenue on accrual	The petitioners are at p	ains to point out
basis but exclusion of items of cost on	inconsistency and	unfairness in
actual payment basis	following the practice	of taking into
	consideration revenue o	n accrual basis
	while costs are allowed	to be deducted
	on actual payment	basis. To
	demonstrate this it was	contended that
	service tax is included i accrual basis but dedu	n the revenue on ction is allowed
	only on actual payment.	This results in
	difference between reve	nue booked and
	deductions made. As	a result of this
	most service providers	end up paying
	licence fee even on	the uncollected
	portion of the service	tax……It also
	recommended that	interconnection
	usage are also to be sh	own on accrual
	basis both for inclusio	n and exclusion
	from the gross revenue	for purpose of
	AGR. We find no r	eason to differ

¶147

¶148

with the view of the Authority on this
point. The recommendation of the
Authority is, therefore, affirmed.

¶149

It would furthermore be of some significance to notice that by reason of one communication, demand had been raised in respect of so many circles on both petitioner Nos. 1 and 2 for a sum of Rs. 17,66,64,731/-.

¶150

It is not in dispute that the petitioners had supplied details of the receipts and expenditures as demanded by the respondent on ‘actual’ basis also.

¶151

The respondent in its reply, however, contended that the principles laid down by this Tribunal in its judgment have not assumed finality as appeals have been preferred before the Supreme Court of India.

¶152

The Supreme Court of India, as noticed hereinbefore, merely directed that no adjustment should be made in the mean time. The said order, in our considered opinion, does not amount to stay of the operation of the judgment of this Tribunal. If the Supreme Court of India intended to stay the operation of the judgment, it could have said so explicitly. It consciously passed a limited order of stay. It is not within the province of the respondent to expand the scope thereof. If the

¶153

¶154

respondent intended to obtain any clarification of the said order, it should have approached the Supreme Court of India therefor.

¶155

Furthermore, the Supreme Court of India itself in its order dated 11.1.2010, directed that payment should be made on existing basis. The operation of order of this Tribunal having, thus, not been stayed, the same would mean that the directions issued by it were required to be followed in making computation of the license fee.

¶156

We may notice that this Tribunal even in its order dated 31.10.2007 directed as under:-

¶157

“The petitioner has raised various pleas in this petition. It is submitted that as of today the judgement of this Tribunal dated 30.8.07 holds the field and without prejudice to the various other contentions of the petitioner in this petition at least from today onwards the Respondent No.1 should bill the petitioner on the basis of the law laid down in the said judgement. The learned counsel appearing for respondent is unable to controvert the fact that the judgement of this Tribunal holds the field. Accordingly, I direct that respondent will bill the petitioner at least from today onwards on the

¶158

¶159

basis of law laid down in the said judgement of this Tribunal dated 30.8.07. This will be without prejudice to the rights and contentions of the parties.”

¶160

Yet again, in Petition No. 284 of 2007, by an order dated 23.10.2007, similar

¶161

observations were made.

¶162

The respondent was even bound by the observations made in the said interim orders. An order passed by this Tribunal against the respondent was meant to be followed. It could not have been circumvented, being binding on it.

¶163

We have, furthermore, noticed that the method of accounting adopted by the respondent was not in consonance with any known method of accounting. By reason of such amalgam of accounting method, the petitioners have been put to financial loss.

¶164

We may furthermore notice that for the period 1.4.2005 to 31.3.2006, the PSTN related call charges passed on to the other operators were Rs.1,226,180,477/-.

¶165

We have dealt with this aspect of the matter in Vodafone v. BSNL (P. No. 325 of 2007). In that view of the matter it is not necessary to reiterate the reasonings stated therein.

¶166

¶167

We, therefore, are of the opinion that the petition should be allowed and the respondent should be directed to adjust accounts on accrual basis so far as the petitioner No. 1 is concerned. The amount which is lying in the hands of the respondent should be refunded with interest @ 12% per annum.

¶168

Mr. Malhotra, however, appears to be correct that so far as the petitioner No. 2 is concerned, that it having obtained an order of stay only on 30.8.2007, would not be entitled to any relief, the demand having been made for the assessment year 2005-06. However, petitioner No. 1 having approached this Tribunal in 2003, the petition must be allowed so far as it is concerned.

¶169

In the peculiar facts and circumstances of the case, there shall be no order as to costs.

¶170

………....... J (S.B. Sinha) Chairperson

¶171

…………….....

¶172

(G. D. Gaiha) Member

Megha Channel v. Channel Plus

Case brief

What is this about?

What did the court decide?

Megha Channel v. Channel Plus

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

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