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DoT slaps fresh penalty of Rs 1,263 cr on Vodafone for fudging facts

DoT slaps fresh penalty of Rs 1,263 cr on Vodafone for fudging facts

Vodafone Group has been asked to cough up Rs 1,263 crore for fudging its books to reduce the government's share of revenue in 2008-09 and 2010-11.

Vodafone Group has been asked to cough up Rs 1,263 crore for fudging its books to reduce the government's share of revenue in 2008-09 and 2010-11. The British telecom giant has been given a 15-day deadline to deposit the amount.

A top official of the Department of Telecommunications (DoT) told MAIL TODAY: "Vodafone India has been given a deadline till June 18 to pay up Rs 1,263 crore for under-reporting revenue by concealing interest income, forex gain, scrap sale and spectrum usage up to January 2012."

The DoT official confirmed that the demand notice was issued to Vodafone India on Monday.

The Vodafone India audit has revealed that the company paid less revenue to government in terms of adjusted gross revenue (AGR).

Based on telecom licences, telecom operators are required to pay licence fee and spectrum usage on AGR, which is earned from telecom services only. According to official sources, DoT found that adjusted revenue filed by Vodafone were not appropriate.

The auditor, SK Mehta and Company, found that certain items like interest income and forex gains were excluded while calculating AGR.

Vodafone India spokesperson refused to comment on the issue.

Interestingly, DoT had issued similar demand notices to Vodafone India for recovering Rs 1,100 crore in February for having under-reported revenues earned during 2006-2008. Vodafone had moved the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against DoT's demand notices.

DoT had, in 2009 too, conducted special audits of Vodafone's books, along with those of other telecom giants Bharti Airtel, Reliance Communications, Idea Cellular and Tata Teleservices, for assessment years 2006-07 and 2007-08.

The audits were recommended by the Telecom Regulatory Authority of India after the government received a number of complaints that telecom firms were fudging their books so as to pay a lower revenue share.

The telecom companies have contested the complaints but the government has contended that the Universal Access Service Licence conditions specifically exempt only four items from calculating the AGR.

However, early last year, DoT argued that the licence agreement clearly states that revenue share applies to all revenues of the company and other revenues would not exist without the telecom business.

Vodafone is already struggling to settle Rs 11,200 crore tax liability case with Indian government over tax on its acquisition of Hutchison's stake in Hutchison-Essar in 2007, but has not received any respite so far.

The company is also in dispute with DoT over its 3G intra-circle roaming agreement with Airtel and Idea Cellular. DoT has termed the agreement illegal and asked the company to terminate it. Vodafone, along with the other two telecom majors, has challenged DoT's order in this regard.

With inputs from agencies