Bombay High Court strikes down retrospective spectrum charge on Airtel, Vi

The Bombay High Court has quashed the Centre’s 2012 decision to impose a One Time Spectrum Charge (OTSC) on telecom operators for holding spectrum beyond 6.2 MHz, providing relief to Bharti Airtel

and Vodafone Idea.

The court allowed petitions filed by the two telecom companies and set aside the demand notices issued by the government. It also directed the Centre to return the bank guarantees submitted by Airtel and Vi in connection with the levy.

The dispute relates to the government’s decision in 2012 to introduce OTSC retrospectively from July 1, 2008. The charge was imposed on additional spectrum held by telecom companies beyond the prescribed limit.

The Bombay High Court is likely to bring relief of over ₹20,000 crore for Airtel and Vodafone Idea, combined.

A division bench of the Bombay High Court observed that the Centre failed to establish any legal authority or contractual basis to impose the charge retrospectively.

The court said the government could not modify the financial conditions of telecom licences after operators had already entered into agreements and operated under the existing framework.

The bench noted that telecom companies had paid for spectrum through the revenue-sharing system under the National Telecom Policy, 1999. It held that introducing an additional financial obligation years later effectively changed the original terms.

The court also rejected the argument that the levy was justified only on the basis of revenue maximisation, stating that this could not alone be treated as a sufficient public interest ground.

The Bombay HC further held that recommendations around spectrum charges did not support the retrospective levy imposed on spectrum holdings up to 10 MHz.

With the ruling, the government’s demand notices against Airtel and Vi stand cancelled.