Supreme Court Denies Recall Of Ruling That Held Telecom Licence Fee As Capex

The Supreme Court has declined to recall its telecom licence fee judgement, whereby it was held that the payment of licence fee by telecom companies will be classified as capital expenditure and not revenue expenditure.

However, the court has agreed to hear the application on two issues that were not dealt with in the judgement.

The top court has said that it will deal with the issue of whether there should be a waiver of interest on the dues payable by the telecom companies and on the question as to whether the judgement should be given prospective effect.

The case is likely to come up for a hearing before a bench comprising Justices BV Nagarathna and Ujjal Bhuyan on Feb. 12.

In October last year, the top court ruled that the payment of the licence fee would be classified as a capital expenditure.

At the centre of the dispute lay the issue of whether the licence fee, which is payable in a staggered or deferred manner every year, should be re-characterised as a revenue expenditure.

According to the National Telecom Policy of 1999, telecom companies were required to pay a one-time licence fee for entry, along with a licence fee that was payable based on their yearly turnover.

This was in contrast to the earlier policy of paying the licence fee in one go.

The court ruled that the variable licence fee, which is paid yearly, cannot be reclassified as a revenue expenditure.

"A single transaction cannot be split up in an artificial manner into a capital payment and revenue payments by simply considering the mode of payment," the top court had said.

It was also held that the manner of payment is irrelevant and that the variable licence fee payments made after July 1999 are a continuation of the licence fee payment, which is a mandatory payment intrinsic to the trade itself.