Define revenue, Mr Sinha PDF Print E-mail
Tuesday, 20 December 2016 05:04
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Till there’s clarity, why send dues’ notices to telcos?


Asking telcos like Bharti Airtel and Vodafone to pay Rs 12,500 crore of license fee dues may have helped telecom minister Manoj Sinha blunt the Congress party’s allegation of a government cover-up, but he is guilty of playing to the gallery by not paying heed to the facts. Sure, the CAG has said the telcos understated their revenues by over Rs 45,000 crore between 2006-07 and 2009-10, but Sinha’s bureaucrats would have told him that the entire matter is under dispute in various courts including the Supreme Court – in such a situation, why were the notices even sent? The case deals with a very serious issue – what comprises revenue – and until this is resolved, will result in more such notices being sent for later years. Logically speaking, the government should only charge a revenue-share on a firm’s telecom revenues and not on, say, the profit made selling its office space or selling one part of the business. With the government insisting these be included in telecom revenues, the telcos went to the TDSAT which upheld their pleas in 2007. Following an unfavourable verdict, Sinha’s ministry appealed to the Supreme Court which gave a confusing verdict. It said the TDSAT could only rule on disputes relating to the interpretation of license conditions (should dealer discounts be taken into account while charging license fees?) but could not change license conditions (should capital gains be included in telecom revenues?). The telcos then went into appeal before various high courts on the issue of license conditions like capital gains taxes and back to the TDSAT on issues like dealers’ commissions. When, in 2015, the TDSAT again ruled mostly in favour of the telcos, the government once again appealed to the Supreme Court.


Not only does Sinha have to ensure no notices are given till there is a final decision on what revenues are, surely he needs to come out with guidelines for future years? And, perhaps on that basis, resolve the disputes relating to earlier years – this is precisely what the finance ministry is trying to do in various transfer pricing cases where an aggressive taxman added Rs 2.2 lakh crore to the incomes of various MNCs between FY12 and FY15. If various non-telecom revenues are added to the telecom revenues of firms, how can they continue to do business in the country? And if such revenues are added to the incomes of telecom firms, surely the same will be done for airports and metros other services on which the government takes a revenue-share? Indeed, given its larger ramifications, this is something the prime minister’s office needs to monitor regularly.



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