To contain the fiscal deficit at the targeted 5.3 per cent of the GDP (gross domestic product), the government on Wednesday issued a stern warning to evaders of excise, customs and service tax to either pay up their dues or face penal action such as arrest, prosecution and property attachment.

In a statement issued here, Revenue Secretary Sumit Bose said: “We are keeping a very close watch on such elements. They are advised to come forward and pay all taxes and avail themselves of the benefit of reduced penalty.”

Mr. Bose warned that if the evaders failed to comply with the law they should be prepared to face the consequences, which would include “provisional attachment of property, arrest and prosecution, suspension of Cenvat credit and 100 per cent penalty and interest.”

Urging all assessees to ensure timely and correct payment of customs duty, excise duty and service tax for continued trade facilitation, he said: “It has been observed that a number of Central excise assessees continue removing goods clandestinely, sometime even without registration, misusing Cenvat credit or simply not paying Central excise duties which are due to the government in disregard of the law.”

Likewise, in the case of service tax, Mr. Bose said that it had come to notice that more than half of the service providers who were registered were not filing returns while a number of service providers who should be paying service tax had not yet registered themselves.

“The Department has also gathered information that a number of service providers are collecting service tax from receivers of service but not depositing the tax with the government,” he said.

All services are taxable from July 1, 2012, except those in the negative list and exempted services.

As for evasion of customs duty, Mr. Bose said: “We have seen that some importers and exporters are indulging in under-invoicing on import or over-invoicing in exports and mis-declaration of goods and are misusing exemptions and various incentive schemes to evade customs duty.”

The Revenue Secretary argued that when 70 per cent of the consignments were being cleared by customs on self-assessment basis without any assessment and examination by Department, “it is incumbent upon the importers or exporters to discharge their correct duty liability.”

Noting that some unscrupulous elements are already on the radar of the DRI (Directorate of Revenue Intelligence) and intelligence wings of customs houses, Mr. Bose said such importers and exporters should be ready to face legal consequences, including arrest and prosecution, besides payment of duty with interest, fine and penalty up to 100 per cent of duty evaded.