The Telegraph
Thursday , April 17 , 2014
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CAG has power to audit accounts of private telecom players, says SC

New Delhi, Apr 17 (PTI): The Supreme Court on Thursday held that the Comptroller & Auditor General of India (CAG) has the power to audit the account books of private telecom companies, which share revenue with the government for using spectrum.

A bench of justices K S Radhakrishnan and Vikramajit Sen said CAG may 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 industry bodies such as the 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.

On February 3, the apex court had sought responses from the Union government and the 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.

In line with 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 Union government and hence, they would be the subject matter of CAG's audit, the high court had said.

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