Bombay HC Quashes One-Time Spectrum Charge on Airtel, Vi — Here's What It Means

The Bombay High Court on Monday quashed the Department of Telecommunications' (DoT) 2012 decision to impose a one-time spectrum charge (OTSC) on telecom operators Bharti Airtel and Vodafone Idea (Vi), providing a combined relief of over ₹24,000 crore to the two companies in a 13-year legal battle.

A Division Bench of Justices Manish Pitale and Shreeram V Shirsat ruled that the government had failed to justify levying the charge retrospectively, and directed the Centre to return bank guarantees deposited by both companies. The order came in response to writ petitions filed by the carriers.

What was the Dispute?

In 2012, the Union government decided to levy a one-time charge on spectrum holdings beyond 6.2 megahertz (MHz). The DoT subsequently raised demands on existing telecom operators for spectrum held beyond this threshold, with retrospective effect from July 2008.

Airtel and Vi challenged the move before the Bombay High Court in 2013, arguing that they had already paid applicable licence fees, entry fees, and spectrum usage charges under their licence agreements, and that the government lacked the authority to retrospectively impose an additional levy years after spectrum allocation. The court had granted interim protection to the operators in January 2013, restraining the government from taking coercive action during the pendency of the matter.

The bench set aside the Centre's decisions of November and December 2012, along with the consequential demand notices issued to the companies, and quashed all consequential actions taken by authorities.

"We have come to a conclusion that the petitioners have been able to make out a case in their favour seeking quashing and setting aside of the impugned decisions and consequent demand notices," the court said as quoted by reports. "The respondent has not been able to justify the said decisions and its action of levying one-time spectrum charge retrospectively upon the petitioners," the court added.

The court observed that telecom operators had already been paying licence fees and spectrum usage charges under the existing regime, and that the government failed to establish a contractual or statutory basis for introducing an additional retrospective charge for spectrum already assigned. The bench also noted that the state cannot retrospectively alter contractual financial obligations without clear authority under law.

Rejecting the Centre's argument that spectrum, as a scarce natural resource, justified the levy, the court held that while the government holds spectrum in public trust, it remains bound by the terms of licences granted to operators.

As per its FY25 annual report, Airtel had disclosed a contingent liability of ₹6,600 crore towards OTSC, with total liability — including interest of ₹9,954 crore — rising to ₹16,500 crore as of March 2025. Vodafone Idea's exposure stood at ₹7,581 crore, as per its FY25 annual report.

The broader legal battle over OTSC, however, remains pending before the Supreme Court through multiple parallel proceedings. In July 2019, the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) had ruled that OTSC could be levied prospectively but not retrospectively, a ruling the DoT challenged before the SC, where it is still pending. The DoT can also challenge the high court's ruling before the apex court.