Apex Court Judg­ment has Tele­cos Wor­ried

In­dus­try be­lieves the or­der will fur­ther toughen the op­er­at­ing en­vi­ron­ment

Voice&Data - - ANALY S I S -

In a decision that has the po­ten­tial to sig­nif­i­cantly im­pact the tele­com sec­tor in In­dia, the Supreme Court on April 17 ruled that the Comptrolle­r and Au­di­tor Gen­eral ( CAG) of In­dia has the right to au­dit the re­ceipts of tele­com op­er­a­tors that share rev­enue with the gov­ern­ment for use of spec­trum.

“Scru­tiny by the gov­ern­ment au­di­tor is nec­es­sary to en­sure that the ex­che­quer gets a le­git­i­mate share of the rev­enue gen­er­ated from pub­lic re­sources,” jus­tices KS Rad­hakr­ish­nan and Vikramjit Sen said.

Ex­pect­edly, the tele­com in­dus­try has re­acted cau­tiously to the ver­dict and be­lieves that it will fur­ther com­pli­cate the al­ready dif­fi­cult en­vi­ron­ment of op­er­a­tions.

“The ver­dict is dis­ap­point­ing. Our mem­ber tele­com com­pa­nies will now have to as­sign ad­di­tional man­power and man­age­rial hours to­wards this,” said Ashok Sud, Sec­re­tary Gen­eral at the As­so­ci­a­tion of Uni­fied Tele­com Ser­vice Providers of In­dia.

“The Depart­ment of Telecom­mu­ni­ca­tions (DoT) al­ready has the power to con­duct au­dits and one more au­dit was not re­quired,” Sud said.

“There are wider im­pli­ca­tions of the ver­dict as well. And not just for tele­com. This sets a prece­dent for all com­pa­nies that con­trib­ute funds to­wards the ex­che­quer to be au­dited by the CAG. It also means that the CAG would have to invest pub­lic funds to­wards ex­pand­ing ex­po­nen­tially to do this,” he said.

Rajan S Mathews, Di­rec­tor Gen­eral, COAI, though has a dif­fer­ent take on the is­sue.

“The SC has also up­held the lim­i­ta­tion on the au­dit im­posed by the Delhi HC or­der, i.e., CAG has limited scope to au­dit only that rev­enue on which gov­ern­ment fees is com­puted,” Mathews said.

But he also be­lieves that the or­der is far-reach­ing and will slow down the work­ing of the sec­tor.

“We have two con­cerns, one is mul­ti­ple au­dits by mul­ti­ple agen­cies (DoT, TRAI, SEBI and now CAG), in­creas­ing the costs and time to op­er­a­tors and se­condly, in­creas­ing the scope of CAG to pri­vate en­ti­ties,” said Mathews.

He fur­ther added, “By the logic of the court, ev­ery tax payer should also be sub­ject to au­dit by the CAG, in ad­di­tion to the IT Depart­ment This rul­ing will be­come a larger is­sue for cor­po­rate In­dia and not just mo­bile op­er­a­tors.”

The is­sue reached SC after Delhi High Court al­lowed CAG to con­duct an au­dit of the rev­enue re­ceipts of tele­com firms.

Tele­com ser­vices firms moved the Supreme Court in Jan­uary on the grounds that they were pri­vate com­pa­nies and not come un­der the ju­ris­dic­tion of CAG.

The gov­ern­ment had ar­gued that in pri­vate-pub­lic part­ner­ship ven­tures, the rev­enue gen­er­ated by the li­cence hold­ers is re­quired to be shared with the Union gov­ern­ment in line with the li­cens­ing agree­ments.

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