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Auspi moves SC over audit of pvt telecom companies

Putting the firms through another audit would be burdensome, said Auspi in its appeal to the Supreme Court

Dual-technology industry body, Association of Unified Telecom Service Providers, Tata Teleservices and Reliance Communications on Tuesday challenged the Delhi High Court’s ruling that allowed the government’s auditor to look into the accounts of private telecom operators.

Putting the firms through another audit would be burdensome, said Auspi in its appeal to the Supreme Court, calling the move unconstitutional.

Opposing any such audit into the accounts of private telecom companies, the petition said that section 16 of the CAG Act makes it clear that the government auditor can only audit the receipts that are payable into the Consolidated Fund of India (CFI).

The court failed to appreciate that neither section 16 of the CAG Act nor Articles 149 and 266 of the constitution deal with private firms at all, it said, adding that receipts payable into the CFI cannot be equated with licence fees or spectrum usage charges made to DoT.

It further added that the licencee is not required to maintain any books of account on behalf of the government.

Merely because a telecom company is required to maintain accounts of its own transactions with its customers from which sums due to the government can be ascertained does not make the accounts of such transactions the accounts of the government, the telcom body stated, adding that the only reason by the HC that the telecom operators were accountants of the Central government is untenable.

Besides, there are adequate checks and balances under the licence for verification of accounts in the licence and Trai regulations by DoT and Trai.

?The Trai’s Reporting System on Accounting Separation Regulations 2012 make it mandatory for operators to separate their records for each service being offered. The regulations strengthen audit and accountability provisions,? the petition added.

The licence fee that an operator pays from its revenue goes to the accounts of DoT which in turn flows to CFI, hence the receipts by DoT, which is payable to the CFI, is auditable by CAG, the industry body said. According to Auspi, allowing CAG to audit them is a breach of licence conditions as only DoT can conduct special audits of telcos.

?The licence agreement obliges the licencees to maintain accounts of the kind prescribed in the agreements, to produce these accounts as and when demanded, and if the government is satisfied that the accounts are not accurately maintained, there is a provision for a special audit,? the petition stated.

The High Court on January 6 had held that the CAG can audit the revenue-sharing details of these firms to check under-reporting of revenue for calculating the licence fee.

Sensing under-invoicing of revenue by telecom operators, leading to huge revenue loss to the government, the CAG in 2009-10 had made unilateral efforts at auditing the revenues of private telecom players by seeking such details from 2006-07.

This was challenged by the two telecom lobby groups ? COAI (GSM operators) and Association of Unified Telecom Services (CDMA players) in the HC, saying the national auditor cannot audit private firms and there was already an existing mechanism of special audit provided by the licence agreement with DoT.

The DoT had also audited five telecom companies?Bharti Airtel, Vodafone India, Reliance Communications, Tata Teleservices and Idea Cellular ? in 2007-08. Based on these audits, as much as Rs 1,600 crore penalty was slapped on these operators.

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First published on: 22-01-2014 at 00:36 IST
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