TDSAT sets aside DoT order asking telcos to go for CAG audit

Telecom tribunal TDSAT has set aside a DoT directive that asked phone companies to submit their books for CAG audit, saying that it was arbitrary.

The TDSAT bench, headed by its chairman Justice S B Sinha, set aside the directive on the grounds that DoT had already done a special audit and further audit by Comptroller and Auditor General (CAG) was unwarranted.

"In that view of the matter, the impugned orders passed by the DoT cannot be sustained, which are set aside accordingly," the tribunal said.

"Furthermore, after a special audit has been conducted, the question of having another audit in terms of Clause 22.5 of the condition of license would not arise," it added.

However, it said that for 2008-09, DoT can get a special audit done after citing adequate reasons or in cases where audit or special audit has not been done.

"So far as the financial year 2008-009 is concerned, recourse to audit or special audit having not been resorted to by the DoT, it may take suitable action upon assigning adequate reasons in relations whereto it has to form an opinion within the meaning of clause 22.5 of the license," the tribunal said.

It also said that a direction for audit or special audit can be given by DoT if any mis-statement or a mis-declaration has been noticed.

A DoT notice on March 16, 2010 directed telcos to submit their accounting records of three years, starting 2006-07, for an audit by the CAG.

Four leading operators, Bharti Airtel, Vodafone, Tatas and RCom, besides state-run company BSNL, had been asked by CAG to submit their account books to ensure that they were paying dues properly to the government.

The private operators, who were earlier subjected to a special audit after the government observed irregularities related to fee payments, have maintained that the government auditor CAG has no jurisdiction over the accounts of private operators.

As per Trai Act, 2002, the accounts of private operators can be audited by CAG and the same was also incorporated in the licences of these players.

CAG, however, has said that it was not auditing the books of accounts of the private telecom operators per se, but only those records that relate to determining whether the share of revenues being paid to the government was correct.