Sensing under-invoicing of revenue by telecom operators, leading to huge revenue loss to the Government, the CAG has sought revenue details of private companies from the TRAI. The apex auditors move to seek details from the regulator TRAI is a big setback for private telecom giants, which were stonewalling the CAG’s move to audit their accounts to find out the actual revenue.
As per the rules, all telecom companies have to share their revenue details with the Telecom Regulatory Authority (TRAI). The CAG sought details of all accounts of private companies starting from 2006-07 and asked TRAI to submit it by June 20.
“DoT (Department of Telecom) has commenced the assessment process of the licence fee and spectrum usage charges of the telecom service providers since 2006-07. Therefore, it has now been decided to call for the revenue sharing details and documents from the private telecom service providers,” CAG said in its communiqué to TRAI.
According to sources, the CAG’s move to find out the actual gross revenue would give several operators nightmares. In the telecom sector, most of the companies boast about their big subscriber base but when it comes to the mandatory sharing of revenue, there have been reports about a number of them under-invoicing to tax authorities.
The auditors smelled under-invoicing of revenue by certain telecom operators during the audit of 2G spectrum scam in 2010. All telecom companies went to court when CAG sought their accounts. Though all courts directed the companies to handover the accounts to CAG, the starting of audit was blocked due to an ongoing case in Delhi High Court.
Supreme Court ruled that CAG was authorised to audit any accounts of private body if there was any link connected with revenue sharing with Government. But interestingly, the order had a rider that the auditing would start after the settlement of first case filed by telecom operators in Delhi High Court. This case is in last stages and the litigation has been prolonged to three years due to several legal hurdles created by private companies.