1-6/2001 - LF

Ministry of Communications

Department of telecommunications

No 1300, Sanchar Bhawan, 20 Ashoka Rd., New Delhi 110001

(Licensing Finance Cell)

 

Office Memorandum

 

Dated 8th December 2003

 

To,

The Controller of Communication Accounts,

Assam, Bihar, Madhya Pradesh, Gujarat, Haryana, Himachal Pradesh, Andaman &

Nicobar, Maharashtra, North East, Punjab and UP(West).

 

Sub: Transfer of Work Related to Licensing Finance Functions

in respect of Cellular and Basic Services to the Office of

Controller of Communication Accounts (O/o CCA) - Reg.

 

Ref: O.M. Dated 34-31/2000-SEA dated 30.01.2001

 

1.     Attention is invited to the orders contained in the Office Memorandum (para 8 refers) referred to above, whereby the work relating to "Collection of License Fee in the form of Revenue Sharing from various operators on behalf of the Government” has been delegated to the O/o CCA.

 

2.     It has been decided that the O/o CCA would handle the work relating to collection of License Fee in the form of Revenue Share in respect of Cellular Basic Services in pursuance of the above-mentioned order.  In this connection the discussions held at the Workshop conducted on 25.09.2001 on the subject may kindly be recalled.  A detailed schedule of activities that are proposed to be undertaken for the smooth transition of work from the DOT HQ to O/o  CCA is summarised below for strict compliance.

 

3.1 The date of effect: -

The actual date of effect of transition of work to O/o  CCA is 01.01.2004.  The License Fee payments, which are, collected quarterly in arrears for the financial year 2003-04 due on 01.7.2003, 01.10.2003 and 01.01.2004 and 25.03.2004.  It is to be noted that the LF as  RS. falling due on 01.07.03, 01.10.03 & 01.01.04 are on actual basis.  However, L. F. for the quarter of January - March is due on 25.03.04 which shall be paid on an estimated basis and the shortfall if any shall be paid by the licensee by 15.04.2004.  The licensees have been allowed a further period of 15 days from the due date for payment of License Fee.  Thus the last date for payment of License Fee is 15th of the following month of the quarter except March.  The LF section at DOT HQZ has already collected the License Fee for the initial two quarters of the current financial year from some of the licensees and will continue to collect the payment upto 31.12.2003.  However, from 01.01.2004, the O/o  CCA would be collecting the License Fee pertaining to quarter ending 31.12.2003 in addition to any left over payments for the current financial year.  All short payments pertaining to period prior to 01.04.2003 shall continue to be collected by the DOT HQ.

 

3.2 Submission of Returns on Collection of License Fee: - since the collection of License Fee is being monitored at the highest level, instant communication of collections received by O/o  CCA to the DOT HQ is of utmost importance.  It is, therefore, requested that as soon as the collections are received, a report (Proforma at Annexure A) is sent on the same day by FAX followed by a postal confirmation.  In addition, a Monthly report on the collections received during the month is also required to be sent.  If there are no payments received during the month, a  “NIL” report is required to be sent invariably.  It must be ensured that the amount mentioned in the monthly report tallies with the booked figure under the relevant head in the CAC of the month.  If there are many differences, the reasons for the same is to be furnished.  The due date for receipt of Monthly Report (Proforma at Annexure B) is 5th  of the following month.  All payment should be in the form of DD/Pay order only.

Being high-value DD/Pay order, it May be ensured that they are deposited on the same day and also the clearance of the same watched.

 

3.3 Classification of Payments: - the quantum of License Fee depends on the percentage of Adjusted Gross Revenue (AGR) as defined in the License Agreement.  The rate of License Fee is 12%, 10% and 8% in respect of circles in the category of “A”, “B” and “C” respectively.  The list of Circles/Metros classified under A, B and C are furnished in Annexure C.  An apportionment of Revenue Share is to be made by classifying 5% of the AGR under Universal Service Obligation (USO) irrespective of any category of Circles and remaining to License Fee is to be effected.  For example, in respect of category A Circle, 7% of AGR is classified under License Fee and 5% under USO.  A detailed account head is also furnished in Annexure C.

 

3.4 Maintenance of FBG: - At present Financial Bank Guarantees (FBG) and Performance Bank Guarantees (PBG) are maintained at DOT HQ to guard against default of any payment or breach of any license conditions as per the provisions of the license agreement.  All the original Financial Bank Guarantees along with the annexures etc will be handed over to the respective O/o  CCA who shall be required to personally receive the same.  However, the PBGs will continue to be held at DOT HQs.  A detailed instruction on the maintenance of the Bank Guarantees is placed at Annexure ‘D’.  The formats of the registers to be maintained for the maintenance of the Bank Guarantees are also enclosed.  Since the bank guarantees are an integral part of the License Agreement, timely renewal and proper upkeep of the Guarantees is to be ensured.

 

3.5 Calculation of Interest/Penalty on Delayed Payment: - According to the provisions of the amendments signed by the licensees, interest on delayed payment of License Fee at the rate of PLR + 5% is leviable.  The interest shall be compounded monthly and a part of the month shall be reckoned as a full month for the purpose of calculation of interest.  In addition, in case the amount paid on the self-assessment falls short by more than 10% of the payable License Fee, a penalty of 150% of the entire amount of short payment is leviable.  However, if such short payment is made good within 60 days from the last day of the Financial year, no penalty shall be imposed.  This work of computation of interest/penalty/short payment etc shall be done by the DOT and any demands on this account shall at present be raised by the DOT.

 

4.  Maintenance of records: - the following registers are to be maintained at the O/o CCA in order to ensure timely submission of various returns as explained above.

(i)     Collections Register: This register is intended to record the collections from the licensees on day-to-day basis and format for the same is enclosed at Annexure-E.

(ii)    Revenue Share Register: This register is intended to record the AGR as per affidavit and the Revenue Share payment for each quarter.  This register is maintained service-wise/license-wise.  This register forms the basis for finalization of revenue share at the year-end.  The format for the same is enclosed at Annexure-F.

1.                Bank Guarantee Register: The details of FBG of the licensees are recorded in a register for monitoring purposes.  Any extension or replacements are recorded in the register.  The format of this register is given at Annexure-G.

 

5.  List of documents to be handed over to the O/o  CCA: - The following documents will be handed over to the representative of O/o  CCA who shall personally receive the same under accuitance.

 

1.                Details of Revenue Share collected pertaining to Financial Year 2003-04 Circle/Licensee-wise.

2.                Affidavits/quarterly statements furnished by the licensees for the 1st two quarters of the current financial year.

3.                Copies of license agreements/amendments signed by the licensee.

4.                Original FBG along with extension letters, if any.

 

6. Revenue Share from MTNL/VSNL/VSNL: - All transactions relating to these organisations shall continue to be dealt at the Headquarters itself and it is not proposed to decentralize the work relating to these units at this stage.

 

7. Time Schedule: - The collection of revenue share from the licensees at O/o CCA is to commence from 01.01.2004.  Hence all the Heads of O/o CCA are requested to arrange for collection of their above-mentioned documents from DOT Headquarters, New Delhi.  Doubts regarding the modalities shall also be clarified to the representative deputed here.  A separate communication in this regard shall follow.

 

8. License agreement & Amendments thereof: - it must be ensured that the license agreement and the amendments thereof are thoroughly studied.  Notwithstanding anything contained in this letter, the terms and conditions as stipulated in the License Agreement and amendment thereof with particular emphasis on the financial conditions may be adhered to scrupulously.

 

9. Powers to be exercised by O/o CCA vis-a-vis a week the Licensees:- No action shall be initiated by O/o  CCA in terms of the conditions of the License Agreement and its amendments thereof except for invocation of the Financial Bank Guarantees in case of its non-renewal and non-payment of License Fee.  Such powers shall be exercised only with the approval of the head of the O/o  CCA.  However, any action for encashment of FBGs for non-payment of License Fee may be taken after due approval of this office.  Intimation regarding initiation of such action shall invariably be reported to the DOT HQ.

 

 

 

        -s/d-

(S.K.KAUL)

ASST. DIRECTOR GENERAL (LF-II)

Tel: 23372251 FAX 23372044

 

Copy to,

1.                Sr PPS to Chairman Telecom Commission

2.                Sr PPS to Member (Finance)/ Member (P)

3.                Advisor (F)

4.                DDGs FEB/SEA/TPF/Accounts/VAS/BS

5.                Director (LF)/Director (TA-I) DOT HQ