New Delhi: In a fresh trouble for telecom giants, Income Tax department has initiated a post-2008 probe into the finances, investments and returns of all those 122 2G spectrum licence benefactors whose authorisations were scrapped by the Supreme Court recently.
These 122 licences, granted during the time of former telecom minister A. Raja, were cancelled by the apex court on the ground that they were issued in a “totally arbitrary and unconstitutional” manner.
In its 2G probe case status report, the Central Board of Direct Taxes (CBDT) last week had informed the Supreme Court that it has begun to scrutinise the tax statements and multi- billion investments of these telecom firms on the directions of Central Vigilance Commission (CVC), which is vetting the investigation reports of the department along with ED and CBI, the two other agencies probing the 2G spectrum case.
The CVC, during a meeting last month with a team of CBDT officials, had asked them and the I-T department to focus and probe all those telecom firms who were granted 122 licences during Raja’s tenure.
The CBDT, subsequently has issued formal orders to all its investigation units across the country, to begin a comprehensive financial probe of these telecom firms with retrospective effect from 2008, sources said. A special unit has been put on this job now, they said.
The companies that are now under the I-T scanner are Uninor (joint venture between Unitech and Telenor of Norway), Loop Telecom, Sistema Shyam (joint venture between Shyam and Sistema of Russia), Etisalat DB (joint venture between Swan and Etisalat of UAE), S Tel, Videocon, Tatas and Idea.
Among the 122 licences issued during Raja’s tenure in January 2008 on first-come first-serve basis, Uninor was alloted 22 pan India licences, Loop 21, Sistema-Shyam 21, Etisalat-DB 15, S Tel 6, Videocon 21, Idea 9 and Tatas 3.
The I-T department, which has begun a preliminary probe against these companies, has also initiated the process of issuing notices for want of additional information to those firms where suspect transactions or investments have been found. CVC, according to the sources, was of the view that I-T department was only focusing its probe on three-four telecom firms and that the taxmen should initiate a full probe against all those whose licences were cancelled by the apex court.
“CVC, which is vetting the probe reports of all the three agencies probing the 2G spectrum case, was of the view that the apex court had cancelled these licences on merit...This should be probed for any possible charges of tax evasion, money laundering or corruption in collusion with Telecom Ministry officials,” sources privy to the development said.
Once the I-T department finishes its probe, CVC has suggested that it should share any input of importance with ED and CBI, they said. In huge embarrassment to the government and a jolt to the telecom sector, the Supreme Court had on 2 February cancelled 122 2G licences granted during the tenure of Raja declaring it as “illegal” and blamed the government’s flawed first-come-first served policy.
The court had said allocation of 2G spectrum under Raja was “wholly arbitrary, capricious and contrary to public interest apart from being violative of the doctrine of equality” to “favour some companies at the cost of the public exchequer”.
The I-T department, which has till now detected over Rs1,500 crore of tax irregularities in its probe in the case, has found that telecom companies involved in spectrum allocation had sold their controlling stakes to foreign firms through Mauritius and other foreign shores after allotment of the spectrum, according to the sources.
It had also issued notices to various firms asking them to pay tax on the capital gains from such transactions which includes a Rs80 crore tax notice to a real estate development firm under the transfer pricing clause, they said.
The department has found a number of instances of tax evasion during its 2G probe where firms and entities have not not paid taxes under the garb of change of share holding patterns, extension or receipt of huge loans, and purchase of infrastructure. The companies are, however, challenging the I-T department’s contention in these cases.