SC grants telcos’ interest waiver on tax dues on licence fees

Supreme Court waives interest on telecom license fee tax, benefiting major providers, citing capital nature of payments.

The Supreme Court has given a major relief for telecom service providers, including Bharti Airtel, Reliance and Vodafone Idea, by waiving off interest due on income tax arising from an October 16, 2023 judgment, which held that telecom licence fee should be treated as entirely “capital in nature”.

A Bench of Justices B.V. Nagarathna and Ujjal Bhuyyan agreed to a waiver of the interest levy after the assessees (telcos) said payment of the tax demand from the year 2000-2001 was itself a “heavy burden”. The telcos had urged the court to at least waive the interest payable on the tax for the period.

Additional Solicitor General N. Venkataraman, appearing for the income tax department, had objected to the request. He had contended that it was only logical for the assessees to pay the interest if they were meeting the tax demand.

After giving thoughtful consideration to the submissions, the Bench, in a four-page order dated May 17, published on Monday, directed that “since the judgment of this court is dated October 16, 2023, and having regard to the Telecom Policy, which commenced from the year 1999, the payment of interest for the period for which the tax demand is now to be met in respect of these cases stands waived”.

However, the court made it clear that the order would not act as a precedent.

“The order shall not be a precedent in any other case as we have passed this order bearing in mind the peculiar facts of this case and having regard to the lapse of time in litigation,” the Bench underscored.

The National Telecom Policy of 1994 was substituted by the new Telecom Policy in July 1999.