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TMCNet:  Vodafone questions DoT's authority to levy tax

[January 22, 2013]

Vodafone questions DoT's authority to levy tax

NEW DELHI, Jan 22, 2013 (Mint - McClatchy-Tribune Information Services via COMTEX) -- Vodafone India Ltd accused the department of telecommunications (DoT) of extortion and levying a tax without having the legal authority to do so, in arguments made before the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on Monday, said senior government and company officials present at a hearing.

On Wednesday, the government will defend its levy of the one-time fee on the country's older telecom operators for spectrum for the remainder of their 20-year licence period. The government contends that, based on prices discovered at a 2012 auction, the telecom companies should pay more for the additional frequencies that they're using.

The officials didn't want to be identified due to the sensitive nature of the issue.

Last week, telecom operators, including Bharti Airtel Ltd, Vodafone, Idea Cellular Ltd, Tata Teleservices Ltd and Reliance Communications Ltd (RCom) missed a deadline to pay the contentious fee. Company executives said they had approached TDSAT against the ruling and were waiting for it to be admitted by the tribunal.

The government, through DoT, had sent the telcos demand notices on 9 January and gave them 10 days to pay the first instalment, the due date for which was 18 January. The total first instalment payment from all the affected operators adds up to around Rs.8,100 crore. The government expects to raise a total of around Rs.23,000 crore from the one-time levy.

The fee, as decided by the government last month, will apply to telcos for all airwaves in the 1800MHz and 900MHz bands, known as 2G spectrum, beyond 4.4MHz, for the remaining period of their licences. The telcos will also have to pay for spectrum they hold between 4.4Mhz and 6.2Mhz for the period between July 2008 and December 2012.

The charges have been based on the price discovered for spectrum in the November 2012 auction. For circles where the price could not be discovered due to a lack of bids, the fee has been determined based on the reserve price and will be adjusted once a price is discovered through auction.

As part of the first instalment, Vodafone was expected to pay around Rs.2,093 crore, Airtel Rs.1,758 crore, Idea Cellular Rs.800 crore, Aircel Rs.600 crore, Loop Mobile Rs.607 crore and RCom Rs.63 crore. State-run operators Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd have to pay around Rs.1,300 crore and Rs.900 crore, respectively. But this is likely to be waived by the Cabinet at a meeting scheduled for later this week.

While Vodafone is fighting the case in TDSAT, other operators are expected to follow suit or move the Delhi high court directly to fight the ruling.

___ (c)2013 the Mint (New Delhi) Visit the Mint (New Delhi) at www.livemint.com Distributed by MCT Information Services

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