Telecom operators have moved the Supreme Court to overturn the High Court’s verdict allowing the Comptroller and Auditor General to audit revenues of private companies.
The Association of Unified Telecom Service Providers of India, representing the interest of CDMA players including Reliance Communications and Tata Teleservices, said the High Court order was against the telecom licence conditions.
“Merely because an entity is required to maintain accounts of its own transaction from which sums due to the Government can be computed, the accounts of such entity do not become the accounts of the Government,” the AUSPI said in its filing.
The Cellular Operators Association of India will also file a petition opposing the CAG move.
C.S. Rao, President, AUSPI, said, “The High Court order goes against the existing laws that govern the telecom industry. The CAG does not have authority over private players.”
The CAG had initiated an audit after TRAI found that some telecom operators were allegedly under-reporting income to avoid paying revenue share to the Government. The telecom companies approached the High Court seeking a stay on the CAG’s decision.
Setting aside their plea, the court, on January 6, had said there are no doubts on CAG’s constitutional powers to look into all forms of income derived by the Government. It, however, added that in relation to accounts of telecom companies, audit has to pertain to revenues and not into aspects such as “wisdom and economy in expenditures”.
The January 6 court ruling has been viewed with apprehension by private firms as it is possible to interpret the directive to say all companies that contribute to the consolidated fund of India can be audited by CAG.
The case goes back to 2009 when DoT hired CAG-empanelled auditors to look into the books of Bharti Airtel Ltd, Vodafone India Ltd, Idea Cellular Ltd and Reliance Communications Ltd for the years 2006-07 and 2007-08.
DoT then issued notices to recover almost Rs 1,600 crore in unpaid dues from the five telcos in June 2012 after it was found that they had allegedly under-reported revenues.