In a significant ruling for India's telecom sector, the Bombay High Court has struck down the Centre's retrospective one-time spectrum levy imposed on Bharti Airtel and Vodafone Idea. The court held that the government lacked the legal authority to retrospectively alter the financial terms of telecom licenses after they had already been granted and acted upon by operators. The decision provides major relief to the two telecom companies, which had challenged the levy and the associated demand notices.

The judgment was delivered by a division bench comprising Justice M.S. Sonak and Justice Jitendra Jain. The bench set aside the government's 2012 decisions introducing the spectrum charge and quashed the subsequent demand notices issued to the telecom operators. The court also directed authorities to return bank guarantees furnished by the companies during the course of the legal proceedings pursuant to interim court orders.

The dispute stemmed from a Department of Telecommunications policy that sought to impose a one-time charge on spectrum holdings exceeding 6.2 MHz. Although the policy was announced in 2012, it was made applicable retrospectively from July 1, 2008. Bharti Airtel had disclosed a demand of approximately Rs 5,201 crore under the policy, while Vodafone Idea, then operating as Idea Cellular, faced a retrospective demand of around Rs 1,069 crore.

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In its ruling, the court observed that telecom licenses are contractual arrangements and that the government could not unilaterally rewrite their financial terms years after operators had accepted the licenses and made business decisions based on them. The judges noted that the Centre failed to establish any statutory or contractual authority that would permit the retrospective imposition of such charges, making the levy legally unsustainable.

The bench further stated that telecom operators had already paid consideration for spectrum usage through the revenue-sharing framework established under the National Telecom Policy, 1999. According to the court, imposing an additional charge years later effectively altered the original bargain between the government and license holders. The judges also rejected the argument that revenue maximization alone could justify the levy, stating that generating additional revenue does not automatically constitute public interest.

The judgment also diverged from a similar view previously expressed by the Madras High Court in a related matter. The Bombay High Court held that the retrospective demand lacked adequate legal support and could not be enforced. It further noted that recommendations made by the Telecom Regulatory Authority of India had contemplated a one-time charge only in limited situations and did not support the levy imposed on spectrum holdings up to 10 MHz. The ruling is expected to have important implications for telecom regulation and government policy concerning spectrum allocation in India.

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