Five private sector telecom firms understated revenues by Rs 14,813 crore: CAG report

In its latest report tabled on the Parliament on Tuesday, the Comptroller and Auditor General has said that five companies — Tata Teleservices, Telenor, Videocon Telecom, Quadrant and Reliance Jio — have understated their revenues by Rs 14,813.97 crore for different periods up to 2014-15, and a consequent shortfall in government collection of Rs 2,578.83 crore.

The government collection from Tata Teleservices is short by Rs 1,893.6 crore, from Telenor by Rs 603.75 crore, from Videocon by Rs 48.08 crore, from Quadrant by Rs 26.62 crore and from Jio by Rs 6.78 crore for licence fee (LF) and spectrum usage charge (SUC), which are a percentage of the operator’s revenue, and interest applicable on late payment.

The CAG findings, which were tabled in the Parliament on Tuesday, are based on the audit of Tata Teleservices and Tata Teleservices (Maharashtra) Ltd from 2010-11 to 2014-15; Quadrant Televentures (2006-07 to 2014-15); Videocon Telecom (2009-10 to 2014-15); Telenor (2009-10 to 2014-15) and Reliance Jio from 2012-13 to 2014-15. CAG also pointed out that telecom operators deducted discounts offered to dealers and customers; free talk time; interest earned from investments and some asset sales from their gross revenue.

They should have been part of the adjusted gross revenue (revenue earned from telecom services) for calculation of licence fee and SUCs. In case of telecom operators offering free talk time to their subscribers, the auditor said that “airtime is not a free commodity, has an intrinsic value” and by making free talk time or promotional offers, telecom operators “were foregoing the revenue resulting in avoidance of LF and SUC”. CAG said that the telecom firms deducted expenses that were incurred in the form of discounts to dealers and distributors.

In another report, the CAG pulled up the Income Tax department for not adopting a uniform approach to deal with cases pertaining to fictitious donations or bogus purchases that have caused revenue loss to the exchequer. “The AOs did not take cognizance of report of the investigation wing and failed to initiate necessary follow up actions by disallowing the amounts of the fictitious donations or bogus purchases, which resulted in the loss of revenue,” the CAG noted.

The CAG also highlighted the issue of exaggerated demands on certain corporate assessees like SBI, Bank of Baroda, Bank of India, IDBI Bank, HDFC, Kotak Mahindra Bank, Air India, Deposit Insurance & Credit Guarantee Ltd etc, to achieve its revenue collection targets by resorting to methods that were irregular and unwarranted.