Reliance Jio v. Union of India: the spectrum-sharing surcharge before TDSAT

The facts in brief

Reliance Jio Infocomm Ltd. (Telecom Petition No. 1 of 2023) and Bharti Airtel Ltd. (Telecom Petition No. 22 of 2024) are Telecom Service Providers holding Unified Licences under Section 4 of the Indian Telegraph Act, 1885, granted by the Department of Telecommunications (DoT). Licensees pay two principal levies tied to their operations: a licence fee computed as a percentage of Adjusted Gross Revenue, and Spectrum Usage Charges for the spectrum allocated to them. SUC rates differ band by band — the schedule runs across the 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3300 MHz and 26 GHz bands, each carrying its own prescribed percentage.

To raise spectral efficiency, the Spectrum Sharing Guidelines dated 24 September 2015 permit two operators to share spectrum, in which case the SUC for the shared spectrum is loaded by an additional 0.5%. The petitioners began sharing certain bands from 2016 and computed the 0.5% loading on the rate of the shared band alone. They wrote to DoT as early as 18 October 2016 asserting this method, but received no reply. In January 2020 DoT referred the question to the Telecom Regulatory Authority of India (TRAI), and in August 2020 TRAI confirmed that the operators' method was the correct one under the existing Guidelines.

Notwithstanding TRAI's confirmation, DoT issued an Office Memorandum dated 11 October 2022 mandating that the 0.5% be applied to the operator's weighted-average SUC rate, followed by a consequential Office Memorandum of 16 July 2024, and raised additional-SUC demand notices against both operators — by which point the petitioners had already discontinued sharing. Jio and Airtel invoked the Tribunal's jurisdiction under Sections 14 and 14A of the TRAI Act to challenge the Memoranda and the demands.

The two computation methods

The entire dispute reduces to where the incremental 0.5% lands. On the Department's reading, the surcharge is applied to the operator's weighted-average SUC rate — the single blended rate derived across the operator's whole spectrum portfolio. That inflates the levy across spectrum that was never shared, because the weighted average folds in unshared bands.

On the operators' reading, the surcharge attaches only to the SUC rate prescribed for the particular band that is actually shared. Spectrum that an operator holds but does not share continues to attract its ordinary SUC rate, untouched by the 0.5% loading. The difference is not academic: the two methods produce materially different liabilities, and the gap recurs every billing cycle for as long as sharing continues.

The Tribunal framed the contest as one of construction of the 2015 Guidelines, read against the backdrop of the regulator's own confirmed position and the operators' long-asserted practice.

What the Tribunal held on construction

TDSAT, in a judgment delivered per Justice D.N. Patel, Chairperson, with Mr. Subodh Kumar Gupta, Member, accepted the operators' method. It construed the 2015 Guidelines to mean that the incremental 0.5% is added to the regular SUC rate only for the spectrum actually shared, leaving unshared spectrum at its normal rate.

The Tribunal was emphatic that the loading does not travel to the portfolio-wide blended figure on which the Department had sought to fasten it.

This is a reading-down of an ambiguous fiscal instrument against the levying authority. Where a guideline imposing a charge can be read either to attach to the specific resource actually used or to a portfolio-wide average, the Tribunal preferred the construction tied to actual use — declining to convert an efficiency-promoting sharing incentive into a portfolio-wide tax on spectrum that was never shared.

Legitimate expectation as an independent ground

The Tribunal did not rest on construction alone. It held the Department's demand independently unsustainable on the doctrine of legitimate expectation. The chronology was decisive: the Guidelines issued in 2015; the operators began sharing in 2016 and asserted their computation method to DoT from October 2016; TRAI itself confirmed that method in August 2020. Only in October 2022 — long after the practice had settled and the regulator had endorsed it, and indeed after sharing had ceased — did DoT issue its contrary Memorandum and raise retrospective demands.

A settled regulatory position, long acquiesced in and confirmed by the sectoral regulator, generates a legitimate expectation that it will not be reversed arbitrarily and retrospectively. The Tribunal drew on the line of authority anchored in State of Jharkhand v. Brahmaputra Metallics, which locates legitimate expectation within the non-arbitrariness guarantee of Article 14, and applied it to the telecom-licensing setting. An operator that has ordered its affairs around a regulator-confirmed method cannot be visited, years later, with a contrary demand sprung without warning.

Procedural discipline under the TRAI Act

Beyond construction and legitimate expectation, the Tribunal located a procedural defect in DoT's conduct. The fifth proviso to Section 11(1) of the TRAI Act binds the Central Government, where it proposes to depart from the regulator's recommendation or position, to follow the statutory consultation process. DoT, having referred the sharing-surcharge question to TRAI and received an answer it did not like, could not simply override that answer by executive memorandum. By issuing the 11 October 2022 Memorandum in the teeth of TRAI's August 2020 confirmation, without following the statutory route, DoT acted contrary to the discipline the Act imposes on departures from the regulator's view.

The point matters institutionally. The TRAI Act establishes a structured relationship between the policy-setting government and the expert regulator, and the consultation proviso is the hinge of that relationship. A demand that ignores the regulator's confirmed position and the statutory process for departing from it is, on the Tribunal's reasoning, infirm independently of the merits of the underlying computation.

Why the order matters

This is the corpus's first standalone TDSAT order, and it establishes several markers. It confirms the Tribunal's appellate jurisdiction over DoT demands under Sections 14 and 14A of the TRAI Act. It supplies a worked example of construing ambiguous fiscal guidelines against the levying authority, tying incremental charges to the specific resource actually used rather than to a portfolio average. And it applies legitimate expectation as a live shield against retrospective regulatory reversal in the licensing context.

The order sits at the contested SUC and AGR frontier that has shadowed Indian telecom since the 2019 AGR judgment. By confining the spectrum-sharing surcharge to the shared band, TDSAT removed a recurring revenue lever and reinforced that fiscal ambiguity is resolved in the licensee's favour. The legitimate-expectation holding, anchored on TRAI's own 2020 confirmation, gives operators a procedural defence against contrary demands issued without regulator consultation.

The construction is not yet final. A statutory appeal to the Supreme Court lies under Section 18 of the TRAI Act, so the Union may carry the question further. But as a TDSAT pronouncement delivered per the Chairperson, the order now governs the computation of the spectrum-sharing surcharge, and it pairs naturally with the corpus's existing spectrum and telecom material.

The interpretive method in fiscal-guideline disputes

It is worth isolating the interpretive method the Tribunal applied, because it is portable beyond this dispute. The 2015 Guidelines did not, on their face, state in unambiguous terms whether the 0.5% increment was to be computed on the shared band's rate or on the operator's blended portfolio rate. Faced with that gap, the Tribunal could have resolved it by reference to the levying authority's revenue interest, or by reference to the language read in the light of its purpose and the conduct of the parties. It chose the latter.

Two features of that choice stand out. First, the Tribunal tied the incremental charge to the specific resource actually used — the band that was shared — rather than to a notional portfolio average that swept in spectrum never shared. That reading keeps the surcharge proportionate to the activity it is meant to price, and it reflects a general reluctance to construe a fiscal instrument so as to tax conduct it was not designed to reach. Second, the Tribunal read the ambiguity against the authority that drafted and sought to enforce the levy. Where a charging instrument is genuinely open to two readings, the construction that limits rather than expands the burden on the regulated party is to be preferred. The combination — purpose-and-use-anchored construction, resolved against the levying authority — is the method that other regulated-industry levy disputes can borrow, and it is what gives the order utility beyond the specific spectrum-sharing context.

Related on Valkya

• State Bank of India v. Union of India: the Aircel spectrum dispute
• BSNL v. Union of India
• Bharti Airtel v. Union of India: GSTR-3B rectification

Sources

1. TDSAT signed judgment PDF (primary source): https://tdsat.gov.in/order_files/final/2025/May/070110000082023_1555.pdf
2. TDSAT Delhi judgments index: https://tdsat.gov.in/Delhi/services/judgment.php
3. Mondaq, "Telecommunication and Broadcasting Laws in India" (2025): https://www.mondaq.com/india/telecoms-mobile-cable-communications/1745262/telecommunication-and-broadcasting-laws-in-india
4. Telecom Regulatory Authority of India — TRAI Act, 1997 (statutory text): https://www.trai.gov.in/about-us/trai-act