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Stern action will be taken against service tax offenders: P Chidambaram
November, 11th 2013

Sending a stern message to tax offenders, Union Finance Minister P Chidambaram today said government was having enough information on economic wrongdoers and warned them of tough action, including arrest.

"Government has to send a message, a stern message, that such violations cannot go unpunished. Therefore, we have arrested them," he said adding that ten persons had been arrested recently for alleged service tax default across the country.

The government would also 'very closely' focus on sectors prone to chronic service tax evasion like consultancy, IT and real estate, he said.

Chidambaram said he had noticed chronic tax evasion in various cities, for example in Chennai in contract service, maintenance and repair service and sectors like consultancy, IT, real estate, mining, transport operators, advertisement, manpower and recruitment and security services.

Speaking at an interactive meet on Trade and Industry, Service Associations and Chambers of Commerce and Industry on Voluntary Compliance Encouragement Scheme (VCES), he said the power of "arrest" was used only in cases where an individual had collected Rs 50 lakh and above and does not deposit it in government account. "Tell me should such a person, be shown any sympathy?.. The money is not a small amount. He is keeping the money and using it. It is an interest free loan from the government," he said.

A great deal of information was being shared among government departments with the use of PAN number and other unique numbers. "We have 360 degree profiles of worst economic offenders. We have dossiers on the worst economic offenders. Because of limitations in the department, we cannot reach to every offender. That does not mean we do not know that there are no offenders," he said.

"Ultimately, we will reach the offenders. But, I do not want any one of you to be offenders. I want you all to be honest citizens, honest tax payers. We are here to help you. Whenever I have been incharge of this department, we have been successful in raising revenues for the Government", he said.

Stating that 17 lakh people had voluntarily registered for filing their service taxes, he said only seven lakh actually pay their taxes. "So, ten lakhs (people) do not pay... Therefore, we have said in the budget that we will reach out to these 10 lakhs. We will give them an opportunity. A fair opportunity. A generous package and let them come forward. At the end of this exercise, I hope a vast majority of the 17 lakh will become tax payers..", he said.

VCES had been introduced with effect from May 10, 2013 as a one-time amnesty scheme for paying service tax dues for the period October 1, 2007 to December 31, 2012 without interest and penalty.

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