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TMCNet:  CAG can audit accounts of private telecom companies, SC says [India Business] [Times of India]

[April 18, 2014]

CAG can audit accounts of private telecom companies, SC says [India Business] [Times of India]

(Times of India Via Acquire Media NewsEdge) NEW DELHI: The Supreme Court on Thursday upheld the department of telecom's appeal that the comptroller and auditor general of India can audit the accounts of private telecom service providing companies.


The apex court held that private companies utilize national wealth, which is spectrum, in providing the cellular and fixed telephone services. So, their profit-loss accounts could be looked into by the CAG, the SC said.

A bench comprising justices K S Radhakrishnan and Vikramajit Sen said CAG can carry out the audit to examine whether the companies are giving proper share of their revenue to the government.

The court passed the order on a batch of petitions filed by telecom companies' associations, including Association of Unified Telecom Service Providers of India (AUTSP) and Cellular Operators Association of India (COAI), challenging the Delhi high court verdict which had given green signal for CAG audit of the firms' accounts.

The apex court had on February 3 sought responses from the Centre and CAG on the pleas of the associations.

The firms had challenged the high court order which had said that it was the duty of CAG to audit telecom companies as a part of their revenue goes to the Consolidated Fund of India.

Earlier, the telecom firms had submitted before the apex court that the high court had erred in holding that CAG was empowered to conduct their revenue audits.

The firms had said that the high court had wrongly assumed that they share revenue with the government and contended that they only pay a licence fee, which was a percentage of their revenue.

The high court had upheld the validity of laws empowering CAG to conduct revenue audits of private telecom firms.

As per the terms of licence agreements, the telecom firms had undertaken the accounting responsibility on behalf of the Centre also and their accounts, in relation to revenue receipts, could be termed as the accounts of the central government and hence, they would be the subject matter of CAG's audit, the high court had said.

(With inputs from PTI) (c) 2014 Bennett, Coleman & Company Limited

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