Ministry of Communications
Department of Telecommunications

RAJYA SABHA
UNSTARRED QUESTION NO 2190
TO BE ANSWERED ON 05.08.2016
CAG report on understatement of revenue

2190. Shri Rajeev Chandrasekhar

Will the Minister of COMMUNICATIONS be pleased to state:-

(a) whether the CAG report tabled in the Parliament on 12 March, 2016 on understatement of revenue by telecom operators, found six leading telecom operators understanding their gross revenue of over ` 46,000 crore between 2006-07 and 2009-10, causing a loss of ` 12,488.93 crore to Government;

(b) if so, the steps taken by Government to recover the loss incurred to the exchequer;

(c) whether Government has announced a special audit of these six telecom operators to re-evaluate the findings presented in the CAG report; and

(d) if so, the reasons therefor and whether this special audit will be carried out by the CAG?

Answer
THE MINISTER OF STATE (IC) OF THE MINISTRY OF COMMUNICATIONS &
MINISTER OF STATE IN THE MINISTRY OF RAILWAYS
(SHRI MANOJ SINHA)

(a) As per CAG report No. 4 of 2016 of Comptroller and Auditor General of India; six telecom operators understated revenue by Rs. 46045.75 crores, for four financial years i.e. 2006-07; 2007-08; 2008-09 and 2009-10. As per the report the short fall in License fee amounts to Rs. 3752.37 crores, in Spectrum usage charges amounts to Rs. 1460.23 crores and interest on short fall upto 31.03.2015 amounts to Rs. 7276.33 crores.. The department has issued regular demands for all the four financial years and Special Audit demands for two financial years 2006-07 and 2007-08. These demands overlap the short falls pointed out in the CAG report. In the case of Financial years 2006-07 and 2007-08; CAG had pointed out a short fall of License fees amounting to Rs. 1269.36 crores. Department of telecom had already issued demands for License fees amounting to Rs. 896.07 crores in 2012 itself based upon the report of Special auditors.

(b) The demands are being recalculated and being issued taking into account CAG report No.4 of 2016; previous demands issued as per license agreement, demands issued as per special audit conducted by department of telecom in 2009 and pronouncements of various court orders etc.

(c) Yes; Government has decided to conduct Special Audit for three financial years 2008-09, 2009-10 and 2010-11. CAG and the department of telecom have independent powers of auditing the accounts of Licensee companies.

The CAG has the powers to conduct audit of telecom companies as per Comptroller’s and Auditor General (Duties, Powers and Conditions of service) Act 1971 and the department has the powers to conduct the audit and special audit of telecom companies as per clause 22.5 and 22.6 respectively of the Unified Service License agreement or equivalent clause in other Licence agreements. The special audit ordered by department of telecom is not to revaluate the findings presented by CAG report.

(d) Department of telecom formed its opinion to conduct special audit of six private telecom companies, based on non-submission of required documents; submission of incomplete documents and non-disclosure of complete information in the submitted documents by these telecom companies. The special audit has been ordered by the department of telecom. Department of telecom has selected the audit firms for special audit which are empanelled by Comptroller and Auditor General of India.