Licence fee of ISPs: TDSAT sets aside a portion of govt order

Sectoral tribunal TDSAT today set aside a portion of government order that said revenues for calculating licence fee for Internet Service Provider category should provisionally include all types of revenue from Internet services.

On June 29, the government had imposed an annual licence fee of 4 per cent of AGR on Internet providers, who were not providing Internet-based telephone services. Earlier, they were providing a notional licence fee of Re 1 only.

Besides, those who were providing Internet telephony and paying a fee of 6 per cent of AGR, were asked to pay at the rate of 7 per cent. From April 2013, both ISPs providing Internet or Internet with telephony services were asked to pay licence fee of 8 per cent of their AGR.

The tribunal was of opinion that "presumably the Central Government was required to consider all aspects of the matter including the question as to whether ISPAI (Internet Service Providers Association of India) with regard to the pure internet service‘ vis-à-vis the services rendered by the UAS licensees have a level playing field.

"If they  do not, appropriate measures may have to be taken in that behalf but ISPAI could not have been asked provisionally to pay on the basis of the AGR, wherefor the final decision was to be taken at a later stage," said TDSAT.

It further said before amending the terms and conditions of the contract relating to payment of licence fee is to be taken, "the same was required to be finally taken and not provisionally and that too subject to the recommendations of TRAI.

"We, therefore, are of the opinion that paragraph 2 of the impugned order cannot be sustained. It is set aside accordingly," said the TDSAT bench headed by its Chairman Justice S B Sinha.

The Internet service providers had requested the tribunal to "quash and set-aside the impugned circular" or to pass "an ad-interim ex-parte order staying the operation of the impugned Circular" immediately.

In the petition, service providers said that they have licence contracts with the Ministry of Communications & IT, having clear provision of licence fee.

"A contract cannot be unilaterally amended by one of the parties without the consent of the other," they said.