Arrests in pipeline for service tax non-compliance

Service tax collections recorded a shortfall of nearly Rs 700 crore last financial year

Even with West Bengal government’s efforts to widen the tax net through voluntary compliance, service tax collections recorded a shortfall of nearly Rs 700 crore in the last financial year.

However, the department has sent out a loud and clear message to big defaulters—face arrests or pay tax.

“Last year, the department could arrest at least three persons on account of non-compliance, and a few more arrests were in the pipeline in Kolkata alone. For each arrest, the tax amount due was nothing less than Rs 2-3 crore,” said Kameswari Subramanian, chief commissioner of central excise and service tax, Kolkata zone, at an interactive session at Calcutta Chamber of Commerce here today.

The Finance Bill 2013, which was passed about a year ago, has given the tax department to arrest service tax defaulters of above Rs 50 lakh. The punishment includes a provision for imprisonment for up to 7 years.“Last financial year the service tax collections from our zone increased by 16 per cent. However, we were unable to meet the target, and the gap was between Rs 700-800 crore,” added   Subramanian.Last financial year, the service tax collection in Kolkata was close to Rs 6,444 crore, informed Subramanian. West Bengal collects indirect tax of about Rs 17,000 crore every year.

“We have come across number of cases of non-compliance, and blatant cases of tax evasion last year. The amnesty scheme was very successful in our zone, but also gives an idea of the extent of non-compliance,” she said. “Failure to pay any amount collected as service tax to the credit of the central government beyond a period of six months from the date on which such payment becomes due then any director, manager, secretary or other officer of such company, who at the time of such contravention was in charge of, and was responsible to, the company for the conduct of business of such company and was knowingly concerned with such contravention, shall be liable to a penalty which may extend to one lakh rupees,“ says the Finance Bill 2013.