SC verdict helps recovery of revenues in billions

By A Staff Reporter,Kathmandu, May 13: A verdict of the Supreme Court (SC) has finally paved the way for recovering the royalty and rural telecommunication development fees worth billions of rupees from internet service providers, including the WorldLink Communications Ltd. 

Billions of rupees have been saved in the state treasury following the verdict, said the Ministry of Communication and Information Technology. 

A joint bench of Justices Hari Prasad Phuyal and Dr. Nahakul Subedi on March 28 quashed eight different writs filed by various companies including WorldLink Communications, and its full text was made available this week. 

The verdict has solved the issue of royalty, and rural telecommunication development fees that have to be recovered by the government according to the law.

The Auditor General has been pointing out since the annual report of the fiscal year 2015/16 that the royalty revenue that the Internet Service Providers are supposed to pay to the government has not been collected by the government and put them in arrears. 

According to an investigation conducted by the Ministry of Communication and Information Technology last year, WorldLink and other service providers were found to have evaded taxes.

After Minister for Communication and Information Technology Rekha Sharma took the leadership of the Ministry, she formed a committee under the coordination of Joint Secretary Gaurav Giri to investigate the issue of tax evasion by internet service providers. The committee made a detailed study of the royalties and rural telecommunication development fees to be paid by eleven internet service providers during the period from the fiscal year 2012/13 to the year 2021/22 and submitted a report mentioning that nine ISPs, including WorldLink Communications Ltd, have yet to pay Rs. 2.46 billion to the government and an additional amount of Rs. 273.3 million was yet to be recovered. 

According to Nepal Telecommunication Authority sources, a total amount of Rs. 3.64 billion is yet to be recovered from nine internet service providers for royalty revenue and rural telecommunication development fees and WorldLink Communications has to pay more than Rs. 1.96 billion. 

Similarly, more than Rs. 410 million from Vianet Communications, more than Rs. 330 million from Subisu, more than Rs. 310 million from Classic Tech, more than Rs. 300 million from Techmind, more than Rs. 120 million from Wavesurfer, more than Rs. 100 million from Mercantile, more than Rs. 40 million from Pokhara Internet and more than Rs. 20 million from Netmax, are yet to be recovered. 

As per the Telecommunications Act-1997, the service providers are required to pay 4 per cent of their annual revenue as a royalty and deposit 2 per cent of their annual income to the Rural Telecommunication Development Fund.

Additionally, according to the Rule 26 of the Telecommunications Regulations-1998, the amount received by the service providers, excluding taxes, fees, VAT, and other indirect taxes, is considered as "annual revenue." It was clearly stated in the Auditor General's annual report that action had been initiated to recover the remaining royalty and rural telecommunication development fees.

Had the court's decision been in favour of the service providers,  it would have been obligatory for the government to refund the amount paid by other service providers, according to the secretariat of the Ministry of Communication.