Entry fee set-off in spectrum bids led to Rs 5,476-cr loss:CAG

Adjustment of one-time entry fee paid by telecom companies, whose licences were quashed by the Supreme Court, against the spectrum price they paid in 2012-13 deprived national exchequer of Rs 5,476.3 crore, a CAG report tabled in Parliament said today.
"Set-off of the non-refundable entry fee of Rs 5,476.30 crore paid by licensees in 2008 whose licences were declared illegal and quashed by the Supreme Court against the auction price payable for spectrum in 1800 MHz/800 MHz held in November 2012/March 2013 deprived the government of the revenue to that extent," the audit report on communication and IT sector stated today.

The government in 2012 decided to adjust the licence fee paid by companies whose permits were quashed in the 2G case. The rider was the adjustment will be provided in the spectrum price those players will shell out in the auction to procure the airwaves.
DoT provided set-off of Rs 1,658.57 crore to Telewings Communications Services (TCSPL), now Telenor, Rs 1,626.32 crore to Sistema Shyam Teleservices (SSTL), Rs 1,506.82 crore to Videocon Telecom and Rs 684.59 crore to Idea Cellular following decision of Empowered Group of Ministers (EGoM) in 2012-13.
Only TCSPL, SSTL, Videocon, Idea participated in auction out of nine operators whose licences were quashed.

CAG said entry fee paid by companies was one-time entry fee and was non-refundable. It cited that even Attorney General in legal opinion sought the DoT mentioned that question of refund of entry fee paid by the companies does not arise at this stage.

It said that even though the Supreme Court did not made any distinction among the licensees while quashing the 122 licences of 9 operators, the DoT on the plea of the operators that their licences were cancelled for no fault of theirs, created two categories of quashed licensees.
The set-off was allowed for operators whose licences were quashed without their fault.

The auditor said it found the requests for set-off of quashed licences were accepted without any verification of the grounds submitted by them.
Even the revenue of Rs 7,741.65 crore earned by these companies from the quashed licences since 2008 was not considered by DoT while preparing note for EGoM for set-off of non-refundable entry fee, the report said.
CAG further said that allocation of spectrum to six
telecom companies in a spectrum band without auction caused loss of Rs 1,014 crore between September 2010-2015.
CAG said that the continued allocation "administratively, free of cost resulted in significant loss to the public exchequer by way of non-realisation of one-time charges which the government would have realised had they auctioned the spectrum".

"This was despite recommendation of Trai to auction the spectrum in the 3.3-3.4 GHz band, which also violated the intent and spirit of the Supreme Court judgement," the report said.
CAG rapped the Telecom Regulatory Authority of India (Trai) for setting up regional offices by ignoring directions of the central government, which incurred an expenditure of Rs 14.12 crore till March 2014.
The executive order for opening of all 11 offices was issued in June 2012 whereby various posts were created by Trai, the report said.
"It was observed by the Audit that Trai Act does not empower Trai to open ROs and create posts on its own," CAG said.

The auditor found lapses at Department of Posts that failed to avail eligible CENVAT credit during 2010-11 and 2013-14 which resulted in avoidable payment of service tax and education cess to the extent of Rs 7.52 crore.
CAG noted that DoP made unfruitful expenditure of Rs 1.71 crore in procurement of barcoded bag labels without developing requisite software which led to non-achievement of its objective.
CAG found deficiencies in contract management, web hosting and application development by the National Informatics Centre Expenditure, which ran up a cost of Rs 14.88 crore.
"Lack of proper monitoring and delays at various stages resulted in hardware and software worth Rs 12.09 crore becoming obsolete," the report said.

Further, NIC failed to forfeit the bank guarantee worth Rs 2 crore on failure of HCL Infosystems to execute work under the e-court project due to lack of coordination among the user groups concerned, it stated.
The auditor noted that NIC made extra-expenditure of Rs 3.62 crore on SMS service by empanelling Tata Teleservices at higher rates compared to rates offered by BSNL for the same.
The auditor also found defective planning by state-run BSNL in implementation of CDR (call data record) based billing and customer care solution.
CAG noted lapses at CDAC Pune on various accounts. It noted that delay of completion of building for C-DAC Pune led to escalation of construction cost by Rs 66.39 crore. Besides this C-DAC Pune incurred extra expenditure of Rs 4.78 crore due to failure to avail concessional electricity tariff during 2010-11 and 201-15.