Auction of spectrum: This time DoT stands up to CAG

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Former Union Minister A Raja. (PTI) Former Union Minister A Raja. (PTI)
SummaryThe face-off is centred on the Rs 1,658 crore licence fees paid by telecom firms in 2008.

In a confrontation sparked by the embers of the 2G spectrum allotment scandal, the Department of Telecommunication has taken on the Comptroller and Auditor General and asked it to seek legal opinion from the Attorney General before declaring policy issues as “illegal”.

Responding to the government auditor’s review of major decisions taken by the telecom ministry during 2012-13, the DoT has also asked the CAG not to stray into commenting on policy matters.

The face-off is centred on the Rs 1,658 crore licence fees paid by telecom firms in 2008 for spectrum, the allotment of which ended up becoming controversial and was cancelled by the Supreme Court.

Telecom firms which had paid this non-refundable one-time entry fee for spectrum in 2008 were allowed by DoT to use the amount to pay for spectrum they won in the auction in 2012.

The CAG has held that this “is not consistent” with the auction process and the unified access service licence guidelines. The auditor has also said that this decision gave “undue benefits” to private operators.

DoT, it has said, should have treated the amount as a forfeit as the apex court had cancelledthe licences holding the allotment process irregular, and not adjusted it for 2012 auction payments.

But the telecom department has rebuffed the auditor, citing the decision of an Empowered Group of Ministers (EGoM).

“The EGoM considered the circumstances in which the set-off was to be allowed and the terms thereof. These were, according to the EGoM, consistent with the Supreme Court judgment,” the DoT has said in its response to CAG.

“The CAG cannot comment on and object to the matter of policy. In the event such a set-off is perceived to be illegal, then the appropriate course is to seek legal opinion from the Attorney General instead of rendering its own opinion in the matter.In absence of such advice, the CAG cannot on its own, seek to interpret documents and come to its own conclusions.

“These are not matters for audit to comment upon. All these decisions involve issues of policy and legality. Issues of policy cannot be dealt with by audit and issues of legality can only be dealt by courts.”

The EGoM, it is learnt, had decided that the “set-off” may be allowed on the earnest money to be paid by telecom firms winning spectrum at the 2012 auction.

Explaining the reasoning behind the EGoM decision, the DoT said it was based on the “principle of equal restitution” and “the set-off allowed was not in the nature of refund as it was allowed only to the companies that participated and were successful in the auction. It is also to be noted that these companies were pressing for compensation under bilateral investment agreements”.

Responding to the CAG observation that failure to penalise telecom firms for not meeting the roll-out obligation - the legal obligation to provide services - resulted in revenue loss, the DoT has said that policy decisions are the domain of government.

“Imposing a penalty for not fulfilling roll-out obligations is a matter of discretion. CAG cannot decide on behalf of the competent authority on the quantum of penalty which should be imposed,” the DoT has said, citing Supreme Court judgments to support its stance.

The latest audit was examining the 2012 auction process in the light of the Supreme Court ruling that the process followed by the government in 2008 was not transparent. The audit covers five firms: Telewings (formerly Telenor), Videocon, Sistema Shyam, Idea and Airtel.

While the CAG argues that it had found irregularities in the 2008 allotment, the DoT has maintained that a final legal view is yet to be taken by the court.

Senior CAG and DoT officials met on October 22 to try and resolve the matter and the auditors are expected to send a final report to CAG Shashikant Sharma at the end of November. Sharma has to approve it before it is submitted to Parliament.

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