On Thursday evening, people were wondering why Congress party called a special press conference. In the press conference Congress Chief Spokesperson Randeep Surjewala put all the blame on Modi government for a telecom scam of ₹46000 crores ($6.85 billion) exposed by the Office of the Comptroller and Auditor General (CAG). The fact of the matter is that the scam happened during 2006 to 2010 and CAG placed the report in March 2016. Modi government could have acted on the report quickly to raise revenues but they decided to appoint a Special Audit after the CAG findings created doubts.
CAG’s report in March 2016 exposed the creative accounting of six telecom companies – Airtel, Reliance Communications, Vodafone, Tata, Idea and Aircel of under invoicing revenues of more than ₹46,000 crores ($6.85 billion) during 2006 to 2010. This money was collected from public and the government has to get the tax share of around ₹12,500 crores ($1.86 billion) and the total value including penalty for tax evasion would be around ₹30,000 crores ($4.5 billion). This was first reported by ‘The Pioneer’ newspaper.
CAG audited this under-invoicing revenue scheme of telecom companies in 2010 when they were unearthing 2G scam. The then CAG Vinod Rai ordered an audit of revenue of telecom companies as per their licensing agreement on the government’s share of the revenue.
All telecom companies united and challenged the CAG in Delhi High Court. Top battery of lawyers led by Congress Spokesperson Abhishek Singhvi fought for telecom companies. Singhvi during his argument even told the judges that if CAG was given such powers, one day they will audit judiciary also. Judges retorted that judiciary has nothing to hide and are happy to be audited. CAG won the case in High Court and Supreme Court too ratified it in April 2014. The Congress-led UPA government did not provide any help to the CAG. Instead the party and the government was bullying the then CAG Vinod Rai.
Coming to the NDA government, its decision to appoint a Special Audit by Chartered Accountants after the CAG’s findings is highly deplorable. CAG has shown the government a huge tax evasion of ₹30,000 crores ($4.5 billion). This is for just four years between 2006 and 2010. The revenue sharing started in 1999. There is a good chance that the under-invoicing practice started from 1999 itself, which in turn means there is more revenues to be generated for the Government!
Ideally the Department of Telecom (DoT) and Finance Ministry should have issued demand notices to operators citing the detailed findings of CAG and assess the loss of revenue, if any, that happened between 1999 to 2006 and 2010 to 2016. Telecom experts say the total amount may cross more than ₹1,00,000crores ($14.9 billion) and tax evasion alone may also cross around ₹60000 crores ($8.94 billion), if probed from 1999 onwards.
Public Accounts Committee of Parliament had already slammed DoT and Finance Ministry and summoned the Secretaries. The BJP government needs to act fast on recovering back taxes that occurred during the Congress regime. If an impression that the mighty telecom lobby can rein in the Modi government too is created, it could have adverse consequences for the party in 2019.
Note:
1. The conversion rate used in this article is 1 USD = 67.15 Rupees.
2. Text in Blue points to additional data on the topic.
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