Fin Min mulls new intel wing to check service tax evasion
April, 15th 2013
Concerned over mounting cases of service tax evasion, the Government is mulling to create a separate intelligence unit to check the menace and stop leakage of revenue.
The proposed Directorate of Anti Evasion to check service tax evasion is likely to be set up by the Finance Ministry close on the lines of two other intelligence agencies under it--Directorate General of Revenue Intelligence (DRI) and Directorate General of Central Excise Intelligence (DGCEI), official sources said.
The Central Board of Excise and Customs (CBEC) has detected service tax evasion of Rs 9,800 crore during April-December period of the last fiscal (2012-13) against Rs 5,000-6,000 crore in the same period of 2011-12.
The move to form a new directorate came after rise in the number of services under the service tax ambit, they said.
"The number of services under service tax has increased significantly. There is a need to strengthen anti-evasion activities in service tax to ensure proper compliance from service tax assessees. A separate Directorate of Anti Evasion on the lines of DRI and DGCEI for service tax may serve the purpose," according to an official note by the Ministry.
At present, DGCEI is entrusted with the responsibilities for collecting intelligence and acting against both the central excise and service tax evaders.
Whereas, the DRI is mandated to check customs duty evasion and collection of intelligence about smuggling of contraband goods, narcotics and under-invoicing among others.
Sources said the DGCEI and DRI have been actively catching service tax, excise and customs duty evaders. However, a separate directorate may help in ensuring strict check on service tax evasion, they said.
There are more than 100 services including air travel, eating out at restaurants, staying in hotels, clubs or guest houses, renting of immovable property, rent a cab, health and fitness clubs and outdoor catering among others mandated to pay service tax at the rate of 12 percent.
Revenue Secretary Sumit Bose had early this year given a stern warning to excise, customs and service tax evaders to either pay dues on time or face penal action which could include arrest, prosecution and property attachment.
Following this, government has realised Rs 10,453 crore service tax during February, 44 percent more than collections in the previous month. About Rs 7,255 crore was collected as service tax in January.
The service tax collection during April-February of financial year 2012-13 was Rs 1.13 lakh crore, while customs duty mop up was Rs 1.5 lakh crore. Indirect tax collections registered 20 percent growth at Rs 4.17 lakh crore in April-February period of last fiscal, according to government's estimate.
As per the revised estimate, the government aims to collect Rs 4.69 lakh crore from indirect taxes, comprising customs, excise and service tax.
Finance Minister P Chidambaram had also in his budgetary speech for 2013-14 highlighted that only seven lakh out of nearly 17 lakh registered service tax assessees were filing returns.
Sources said the government was taking other measures to check service tax, excise and custom duty evaders and working on measures to strengthen anti-evasion mechanism.