rasar Bharati has been showering undue favours on Intelsat
Corporation, an American company that made satellite arrangements to
provide a European beam, an Indian beam and a US link to India's
public service broadcaster. The favours came primarily in two forms:
paying Intelsat Rs 18 cr more than the contracted amount; and
extending its services in spite of objections from the Finance
Department and even though ISRO was providing the same services for
half the rate.
Prasar Bharati paid approximately Rs 300 cr to Intelsat, earlier
known as PanAmSat, from 1995 onward for a period of 15 years. Prasar
kept depositing the "withholding tax" with the tax authorities on
behalf of Intelsat ever since that tax became payable. The
utilization of the services provided by Intelsat was negligible. The
scandal first came to light in 2009 when the Finance Department of
Prasar Bharati mentioned about it in a note dated 13/03/09. A copy
of the note is with The Sunday Guardian.
A copy of B.S. Lalli’s internal note to Director General Aruna
Sharma in September 2009.
"However, such tax should have been deducted from the contracted
payment to be made to the party. Instead the payments have been made
in addition to the contracted amount resulting in excess payments
running into crores," the note says.
The then Prasar CEO B.S. Lalli was informed that an excess payment
of Rs 18 cr had been made to Intelsat. Lalli in his internal note to
Director General Aruna Sharma in September 2009 expressed his shock
and asked for a report. "It is indeed somewhat of a surprise that an
Agreement for such a long period of time was executed then. There is
logic in the arguments that as to why should Doordarshan pay the
Income tax while the Income is going to Intelsat," Lalli's letter
added.
But when the contract between Doordarshan and Intelsat was about to
expire in September 2010, both Sharma and Lalli granted the American
company an extension of six months, up to March 2011, on the basis
of a single party enquiry. This was done when the row over tax
liability had not been settled and was being pursued with the Income
Tax Department. A note sent by Member (Finance) dated 26 August
2010, objected to the proposed extension by saying, "Financial rules
do not permit approval of any agreement with Intelsat or any other
party based on a single party enquiry without going through a proper
procedure of open tendering."
Minutes of the Prasar board meeting and several documents accessed
by this newspaper show that there was deliberate delay on the part
of the authorities to sort out the tax issue. Earlier in 2009 Lalli
referred the matter to Solicitor General (SG) Gopal Subramanium for
advice. The SG through his letter dated 02/09/09 said that while
payments should be released to Intelsat, possibilities should be
explored to recover dues through the Income Tax Department.
The matter was taken up by the Prasar board on 3 January 2011 where
it was pointed out that alternate satellite arrangements to meet
Doordarshan's urgent requirements had already been made through ISRO
at almost half the cost.
It was also pointed out that it was essential to settle the tax
liability issue before releasing any payment to Intelsat. Prasar has
been issuing TDS certificates and any excess credits obtained by
Intelsat from the tax authority were to be adjusted in its favour.
The board, however, ignored the matter and CEO Rajiv Takru ordered
the release of Rs 14.91 cr. This was released on 1 March 2011 to the
Income Tax Department to the credit of Intelsat.
The Sunday Guardian has also accessed the income tax assessment
order of the American company, where it has under declared its
income for the year 2006-2007. The Income-Tax Department has levied
tax at the rate of 10% on revenues, whereas Prasar has been
depositing tax at 11.1% rate all these years. So 1.1% excess tax was
deposited by Prasar all these years.
The Finance Department of Prasar suggested that it needed to adjust
the excess withholding tax deposited for Intelsat before releasing
any fresh payment. The scandal was also reported to the Ministry of
Information & Broadcasting but no action has been taken in this case
so far.
Sources told The Sunday Guardian that certain officials wanted
Intelsat to derive financial benefits from the deal. "Services were
reviewed and to reduce cost it was decided that just one satellite
would be hired. Since the utilization of
Intelsat services was low, and there were hardly any viewers in
western country for Doordarshan programmes, a proposal to revive
programming was discussed. And in future when we get the viewers in
Europe and America we may hire point to point service through optic
links," sources added.
