The Comptroller and Auditor General's (CAG) office is clearly not going to be browbeaten by the fresh controversy sparked by the A. Rajaheaded department of telecommunications (DoT) over the powers and duties conferred on CAG under Article 149 of the Constitution.

Senior officials told Media that under Section 16 of the Duties, Powers and Conditions (DPC) Act, CAG is entitled to look into and examine the government's revenue and expenditure.

It is within the CAG's powers to audit all revenues, whether tax or nontax, that come to the government, they added. The aspects that have to be examined include whether the revenues have been properly assessed and realised so that the government gets what is due to it.

According to reliable sources, DoT has only made a general reference to the law ministry on whether the CAG can go into policy issues of the government.

It has not raised any specific issue, which the CAG audit is looking into.

DoT is now trying to use this general reference to fend off queries raised in the CAG audit under cover of this general reference.

The audit report will be finalised and tabled in Parliament, which means there is still more trouble ahead for telecom minister A. Raja.

According to senior officials, there is no policy issue that the CAG's audit report is looking into in the 2G case as DoT is trying to make out. Spectrum is a scarce national resource and the audit report is looking into the specific issue of whether the government got the right price for it.

Senior officials said spectrum is the property of the common man and a fee is charged for its allocation. The proceeds come into the Consolidated Fund of India and the issue is whether the government got less than what it could have actually got.

Senior officials also pointed out that the law ministry had directed on November 1, 2007, that given the importance of the spectrum issue "it is necessary that the whole issue is first considered by an empowered group of ministers". However, Raja chose to ignore this advice and rushed ahead with the allocation of spectrum in January 2008 at 2001 prices.

Ironically, DoT is now trying to bring in the law ministry to evade uncomfortable questions that have come up in the CAG audit. The draft audit report has found that spectrum was sold at 2001 prices in 2008 when the telecom market was going through a big boom and this resulted in the government getting ` 26,000 crore less than what it should have received.

The CAG audit has also cornered Raja on the licences given to the realty firms and DoT has been forced to issue a statement saying that action will be taken against companies which misrepresented facts.

However, senior officials point out that it was the duty of DoT to vet the applications and carry out a proper verification before allocating spectrum to these companies.