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Arrest provisions to check service tax evasion: Finance Ministry
March, 06th 2013

The Revenue department today said that stringent provisions to arrest service tax defaulters are being introduced to check evasion in view of blatant misuse of certain provisions.

"On Service Tax side, in the recent past where they (assessees) have blatantly misused the provisions, particularly in those cases where they have recovered the money from people and not given to government," CBEC Chairperson Praveen Mahajan said at a Ficci event here.

She said the quantum of duty evasion was huge to the tune of Rs 200 crore to Rs 400 crore.

The Finance Bill has proposed to introduce Section 91 to provide for power to arrest a person for specified offences, particularly non-payment of collected service tax, by an officer not below the rank of Superintendent of Central Excise.

Failure to deposit service tax amount exceeding Rs 50 lakh with the government would result in imprisonment of up to seven years.

Mahajan said that in 2011-12, 527 commercial frauds in Service Tax were detected out of which only 26 persons were arrested. In 2010-11, 581 cases of fraud were detected by Directorate of Revenue Intelligence and only 64 people were arrested.

"We are non-adversarial. Power to arrest have been given to Commissioner. There are enough safeguards.. The (provision) will be reviewed from time to time. So there is no reason to be concerned," she said.

As per the Bill, offences relating to excise and customs duty evasion of over Rs 50 lakh would be made cognisable and non-bailable.

"Arrest provision has always existed in customs and excise. We have raised the limit where this arrest provision can be invoked. From Rs 30 lakh it has been raised to Rs 50 lakh," Mahajan said.

She added: "Now only thing we have introduced is that we do not have to give bail. We will produce him (evader) before Magistrate and he will grant bail, even if it is a Customs or excise offence".

The government's move to amend provisions in the Finance Bill comes against the backdrop of lower than budgeted collections of excise and customs duties.

As per the Budget papers, the Customs collection during 2012-13 is estimated at Rs 1.65 lakh crore, as against the target of Rs 1.87 lakh crore.

In case of excise duty the realisation is likely to be Rs 1.72 lakh crore, compared to the target of Rs 1.94 lakh crore.

However, on the positive side, the Service Tax collection is estimated to be Rs 1.33 lakh crore, as against the budget estimate of Rs 1.24 lakh crore.

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