A city entrepreneur was arrested on Friday for defaulting on Rs 70 lakh service tax. This is the first crackdown on indirect tax defaulters in the city.

Sudip Das (48), owner of a courier agency, thus earned the dubious distinction of becoming the first person to be arrested from the eastern region for failing to deposit service tax. Service tax officials, under the department of revenue, Ministry of Finance, picked him up from his Salt Lake residence. He was later produced at Barasat court.

This is for the first time that service tax rules have been amended to attract the Criminal Procedure Code (CrPC) in line with customs and central excise. Section 91, which was incorporated in this year's Finance Bill, provides power to arrest a person for non-payment of collected service tax, by an officer not below the rank of superintendent of central excise.

With the Finance Bill 2013 allowing arrest and imprisonment of service tax defaulters, officials of service tax in Kolkata had started probing the misappropriation complaints levelled against Das last month. Over the years, Das, who runs his proprietorship firm from 41 Abdul Halim Lane in south Kolkata, had collected around Rs 70 lakh from his clients. "After preliminary probe, we found that he has committed a cognisable offence under Section 91 of the Finance Act. It's a non-bailable section and Das could be imprisoned for seven years," said K K Jaiswal, commissioner, service taxes.

"Let this be a warning for all those assessees evading service taxes. The department will take stern action against them. This was our first arrest from the eastern region after the Finance Bill, 2013 was passed this year," said Jaiswal.

As per the Section 91, a director and manager of a firm that fails to pay collected service tax can be arrested with imprisonment of up to seven years in addition to a penalty extending up to Rs 1 lakh.