Airtel, Vi eye over ₹24,000 crore relief as Bombay HC quashes govt’s spectrum fee demand

In a relief to telecom operators Bharti Airtel and Vodafone Idea, the Bombay High Court on Monday quashed the government’s demand notices seeking one-time spectrum charges (OTSC) on spectrum tax retained above 6.2 megahertz (MHz) from 2008.

In the legal battle that has been going on for 13 years, this decision potentially ₹24,000 crore to companies. According to Bharti Airtel’s annual report for fiscal 2025 (FY25), it had disclosed a contingent liability towards OTSC: ₹6,600 crore. Increased total liability to OTSC ₹16,500 crore, including interest, as of end-March 2025 ₹9,954 crore.

The launch of Vodafone Idea took place on: ₹7,581 crore as per FY25 annual report. It is not yet known whether the amount includes interest. The amount may increase depending on interest calculations.

Welcoming the decision, an Airtel spokesperson said, “This decision marks a significant milestone for India’s telecom sector by removing legal and financial uncertainty and creating a more supportive environment for future investments.”

Also Read | Trai questions Airtel over ‘fast lane’ 5G plans over net neutrality concerns

Vodafone Idea did not respond Mint‘s queries by press time.

While the Bombay High Court has now quashed the claims against Airtel and Vodafone Idea, the broader legal battle over OTSC is pending before the Supreme Court through multiple parallel cases.

A division bench comprising Justices Manish Pitale and Shreeram V. Shirsat allowed the petitions filed by telecom operators and set aside the Centre’s November and December 2012 orders as well as demand notices sent to the companies. The court decided to return the bank guarantees given by the operators regarding the disputed claims. It also canceled all consequential actions taken by the authorities.

While allowing the petitions, the court said, “We concluded that the plaintiffs were able to file a lawsuit in their favor for the reversal and annulment of the disputed decisions and related demand notices.” “Respondent has failed to justify the impugned decisions and its action to retroactively impose a one-time spectrum fee on petitioners.”

The dispute dates back to 2012, when the Union government decided to impose a one-time charge on spectrum stocks beyond the set threshold. The Department of Telecommunications (DoT) subsequently increased its demands to existing telecommunication operators for spectrum retained beyond 6.2MHz, retroactively from July 2008.

Also Read | Vodafone Idea prepares ₹ 1 trillion cash strategy due to dues and capex

Airtel and Vodafone Idea challenged the move before the Bombay High Court in 2013, arguing that they had already paid the applicable license fees, entry fees and spectrum usage charges under the license agreements and that the government did not have the power to impose an additional tax retrospectively, years after spectrum allocation.

The Supreme Court granted interim protection to the operators in January 2013, preventing the government from taking coercive action while the case was pending.

In its ruling, the court observed that telecom operators were already paying license fees and spectrum usage charges under the existing regime and that the government had not established a contractual or legal basis for imposing a retroactive additional charge for spectrum already allocated.

Rejecting the Centre’s argument that the tax was justified because the spectrum was a scarce natural resource, the court held that although the government held the spectrum in public trust, it continued to be bound by the terms and conditions of the licenses granted to the operators. The board stated that the state cannot retroactively change its contractual financial obligations without express authority under the law.

The decision also followed the evolution of India’s telecommunications licensing framework. It was stated that under the National Telecommunications Policy of 1999, operators moved from a fixed license fee regime to a revenue sharing model and continue to pay increased spectrum usage fees when additional spectrum is allocated. It found that the policy framework did not support retroactive application of OTSC to spectrum up to 10MHz, which was at the core of the dispute.

Also Read | Why is the telecom industry facing a double whammy this summer?

In July 2019, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) ruled that OTSC can be obtained prospectively but not retrospectively. DoT challenged the decision before the Supreme Court, where the case is still pending.

Separately, Aircel Cellular has challenged the 2016 Madras High Court order which upheld the DoT’s demand for approximate OTSC payment. ₹3,273 crore. The appeal is also pending in the higher court.

Legal experts said the DoT may challenge the Bombay High Court’s decision in the Supreme Court, which could have the final say on the matter.

The decision comes at a crucial time for Vodafone Idea, which recently received significant assistance from the government on adjusted gross revenue (AGR) dues. On December 31, the government froze AGR dues ₹87,695. Towards the end of April, the cash-strapped telecom company reduced its AGR dues by February: ₹23,600 crore ₹After recalculation, 64,046 crore will be paid by deferring the bulk of its payments by 10 years from FY36 to FY41.