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‘By SC logic, every tax payer should be subject to CAG audit’

Multiple audits will increase the costs and time for operators, say experts.

By: Press Trust of India | New Delhi | Updated: April 17, 2014 11:23:34 pm

The Supreme Court ruling allowing CAG to audit accounts of telecom companies will become a larger issue for corporate India and not just mobile operators, industry body Cellular Operators Association of India (COAI) said on Thursday.

“By the logic of the court, every tax payer should also be subject to audit by the CAG, in addition to the I-T department. This ruling will become a larger issue for corporate India and not just mobile operators,” COAI director general Rajan S Mathews said in a statement.

“We are disappointed with the order but we will abide by the judgment,” Association of Unified Telecom Service Providers of India (AUSPI) secretary general Ashok Sud said. Mathews said there are concerns that there will be multiple audits by multiple agencies (DoT, Trai, Term, Sebi and now CAG) increasing the costs and time to operators and increasing the scope of CAG to private entities.

“Supreme Court judgment allowing CAG to audit telcos to ascertain whether the government is getting its due share is likely to add to the complexity of the operating environment of the telcos,” Deloitte Haskins & Sells partner Hemant Joshi said. He said the ruling would add to the perception that India is difficult country to do business in and there is more government than warranted.

“It could then extend to mining, power, airline, banking, manufacturing, services companies and individuals etc,” he added.

The Supreme Court held that the Comptroller and Auditor General of India (CAG) can audit the account books of private telecom companies which share revenue with the government for using spectrum.

The court passed the order on a batch of petitions filed by telecom companies’ associations, including AUSPI and COAI, challenging the Delhi High Court verdict which had given green signal for CAG audit of the firms’ accounts.

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