HC erred in bringing Telecos under CAG ambit: SC told

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Telecom firms today submitted before the Supreme Court that the Delhi High Court erred in holding that CAG is empowered to conduct their revenue audits.

The companies' counsel argued that the High Court had wrongly assumed that they share revenue with the government and contended that they only pay a licence fee, which is a percentage of their revenue.

"If high court order is upheld then CAG will have to audit account of every tax payer," senior counsel Harish Salve, appearing for a telecom industry body, said while challengingthe High Court order which had said that it was the duty of the CAG to audit telecom companies as a part of their revenue goes to the Consolidated Fund of India.

Appearing before a bench headed by Justice K S Radhakrishnan, he said that the licence conditions for telecom companies provide for appointment of a special auditor, and not an audit by the CAG.

The bench was hearing petitions filed by Association of Unified Telecom Service Providers of India and Cellular Operators Association of India, which moved the apex court against the order.

The apex court had on February 3 sought responses from the Centre and Comptroller and Auditor General of India (CAG) on the pleas of private telecom majors.

The High Court had upheld the validity of laws empowering CAG to conduct revenue audits of private telecom firms.

As per the terms of license agreements, the telecom firms had undertaken the accounting responsibility on behalf of the Centre also and their accounts, in relation to revenue receipts, can be termed as the accounts of the central government and hence, they would be the subject matter of CAG's audit, the High Court had said.

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