 "Spectrum sale faces delay")
The Congress on Thursday charged the Prime Minister Narendra Modi-led administration of creating conditions that would allow six private telecom companies to avoid paying Rs 45,000 crore it owed the government.
The Congress said the PM was complicit in this as he could not have been unaware of the telecom ministry’s moves.
The government, in turn, contested the charge and said it was aware of the issue and had referred it to a panel of auditors.
Law Minister Ravi Shankar Prasad, who was the telecom minister before the reshuffle on Tuesday, called the accusations “utterly bogus”. “Congress needs to understand that there is no underreporting case under the NDA government. It is a case of sin of the Congress-led UPA government,” he said, insisting that the government will recover all the dues with penalty from these telecom firms.
The government was quick to refute the charges. Reacting to the Congress claim, the communications ministry said revenue assurance was their top priority and it was determined to recover every rupee of underpaid amount with interest and penalty from every defaulting company in the minimum possible time.
It added according to the CAG report, the shortfall amounts to Rs 5,000 crore of licence fee and spectrum usage charges and Rs 7,000 crore of interest.
“The department received the key documents scrutinised by the CAG in mid-June 2016. These are being vigorously examined and the process of issue of demands for the four financial years for six operators in 22 license service areas in consonance with license agreement is currently ongoing,” the response read.
The issue dates back to the previous National Democratic Alliance government under former prime minister Atal Bihari Vajpayee (1998-2004).
Under the New Telecom Licencing Policy implemented in 1999 (NTP 1999), then telecom minister Pramod Mahajan evolved a system of revenue sharing.
Telecom companies were to operate under a licence, the fee for which was to be decided on the basis of the adjusted gross revenue (AGR). Cellular service providers had to pay spectrum usage charges (SUC) in addition to the licence fee. This amount was linked to income of cellular companies.
Since this income is considered a part of the Consolidated Fund of India, it fell within the purview of CAG to enquire whether the government had received its complete and correct share of revenue.
The CAG started an audit of the six telecom companies for four years (2006-07 to 2009-10) after the United Progressive Alliance asked for one. It looked specifically at underreporting of income and different methods of accounting adopted by telecom companies. Telecom companies challenged the right of the CAG to audit private companies. The matter went to the Supreme Court which ruled in April 2014 that the CAG had the jurisdiction to audit these companies. The CAG submitted its report in March 2016.
Six telecom companies that were audited by CAG are Bharti Airtel, Vodafone, Reliance, Idea, Tata and Aircel. According to the Congress, the CAG found understatement/underreporting of income by these six companies to the tune of Rs 46,045.75 crore in the four years (2006-07 to 2009-10).
If this sum is worked out in terms of the percentage of revenue owed to the government it amounts to Rs 12,488.93 crore. This does not include penalty and taxes.
The Congress claimed after weighting this amount with increase in telecom companies’ customer base, increase in revenue share, and other income from 2010-11 to 2015-16, this figure could be more then Rs 45,000 crore.
The party has charged that instead of making efforts to recover the money, the Modi government has opted for an alternative re-evaluation of these figures by Telecom Ministry through chartered accountants who are empanelled with them.
The Congress says this is the clearest indication that the Modi government wants to delay the recovery of this money and possibly write it off altogether; and wants to rubbish the findings of the CAG.
An official in the Union communications department said as the issue of definition of the AGR was with the Supreme Court no coercive action against telecom operators is possible till the apex court gives its verdict. This is likely this month, and once the matter is decide, the government will raise the demand.
There is a difference between the definition of the AGR used by the CAG and what the department of telecom has filed in the affidavit to SC.
“So as we cannot take any action, there is no urgency to raise the demand. Once the SC gives its verdict on AGR, we will raise the demand with interest and penalty. The basic point is: there is no loss to government,” he added.
The Congress however said they will raise the matter in the monsoon session of Parliament along with the issue of raising FDI caps and their opposition to the government’s GST Bill.
THE CASE OF PENDING Rs 45K CRORE
The Congress said the PM was complicit in this as he could not have been unaware of the telecom ministry’s moves.
The government, in turn, contested the charge and said it was aware of the issue and had referred it to a panel of auditors.
Law Minister Ravi Shankar Prasad, who was the telecom minister before the reshuffle on Tuesday, called the accusations “utterly bogus”. “Congress needs to understand that there is no underreporting case under the NDA government. It is a case of sin of the Congress-led UPA government,” he said, insisting that the government will recover all the dues with penalty from these telecom firms.
The government was quick to refute the charges. Reacting to the Congress claim, the communications ministry said revenue assurance was their top priority and it was determined to recover every rupee of underpaid amount with interest and penalty from every defaulting company in the minimum possible time.
It added according to the CAG report, the shortfall amounts to Rs 5,000 crore of licence fee and spectrum usage charges and Rs 7,000 crore of interest.
“The department received the key documents scrutinised by the CAG in mid-June 2016. These are being vigorously examined and the process of issue of demands for the four financial years for six operators in 22 license service areas in consonance with license agreement is currently ongoing,” the response read.
The issue dates back to the previous National Democratic Alliance government under former prime minister Atal Bihari Vajpayee (1998-2004).
Under the New Telecom Licencing Policy implemented in 1999 (NTP 1999), then telecom minister Pramod Mahajan evolved a system of revenue sharing.
Telecom companies were to operate under a licence, the fee for which was to be decided on the basis of the adjusted gross revenue (AGR). Cellular service providers had to pay spectrum usage charges (SUC) in addition to the licence fee. This amount was linked to income of cellular companies.
Since this income is considered a part of the Consolidated Fund of India, it fell within the purview of CAG to enquire whether the government had received its complete and correct share of revenue.
The CAG started an audit of the six telecom companies for four years (2006-07 to 2009-10) after the United Progressive Alliance asked for one. It looked specifically at underreporting of income and different methods of accounting adopted by telecom companies. Telecom companies challenged the right of the CAG to audit private companies. The matter went to the Supreme Court which ruled in April 2014 that the CAG had the jurisdiction to audit these companies. The CAG submitted its report in March 2016.
Six telecom companies that were audited by CAG are Bharti Airtel, Vodafone, Reliance, Idea, Tata and Aircel. According to the Congress, the CAG found understatement/underreporting of income by these six companies to the tune of Rs 46,045.75 crore in the four years (2006-07 to 2009-10).
If this sum is worked out in terms of the percentage of revenue owed to the government it amounts to Rs 12,488.93 crore. This does not include penalty and taxes.
The Congress claimed after weighting this amount with increase in telecom companies’ customer base, increase in revenue share, and other income from 2010-11 to 2015-16, this figure could be more then Rs 45,000 crore.
The party has charged that instead of making efforts to recover the money, the Modi government has opted for an alternative re-evaluation of these figures by Telecom Ministry through chartered accountants who are empanelled with them.
The Congress says this is the clearest indication that the Modi government wants to delay the recovery of this money and possibly write it off altogether; and wants to rubbish the findings of the CAG.
An official in the Union communications department said as the issue of definition of the AGR was with the Supreme Court no coercive action against telecom operators is possible till the apex court gives its verdict. This is likely this month, and once the matter is decide, the government will raise the demand.
There is a difference between the definition of the AGR used by the CAG and what the department of telecom has filed in the affidavit to SC.
“So as we cannot take any action, there is no urgency to raise the demand. Once the SC gives its verdict on AGR, we will raise the demand with interest and penalty. The basic point is: there is no loss to government,” he added.
The Congress however said they will raise the matter in the monsoon session of Parliament along with the issue of raising FDI caps and their opposition to the government’s GST Bill.
THE CASE OF PENDING Rs 45K CRORE
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Comptroller and Auditor General of India, in its report presented in Parliament in March this year, said Reliance Communications, Tata Telecom, Vodafone, Airtel, Idea and Aircel under reported their adjusted gross revenue by Rs 46,045.75 crore, leading to a loss of Rs 12,488.93 crore to the exchequer from 2006 to 2010
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The communications ministry said it would conduct a special audit of the operators’ book for three years — 2009-10 to 2010-11
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Currently, six auditors empanelled by the CAG have been auditing the books of the operators
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In June, the CAG submitted documents related to operators’ accounts to the communications ministry
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The ministry is, currently, analysing the documents. After due-diligence, demands will be raised along with interest and penalty
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The communications ministry under the United Progressive Alliance also conducted a special audit of operators for two years (2006-2008)
- The SC in April 2014 passed a verdict saying the CAG can audit the accounts of telecom operators
