Finance Ministry should expedite inter-linking of database of taxable income to avoid losing revenue due to lack of coordination and discrepancy, a Parliament panel has suggested.
The Public Accounts Committee (PAC) of the Parliament Chaired by K V Thomas in its 2014-15 report on service tax on banking and other financial services, said the Ministry should inform the panel of the concrete steps taken in this direction within six months of the presentation of the report.
"With regard to devising a suitable and effective system for co-relating the data of taxable income...The Ministry has not come up with any concrete action and has merely submitted the existing procedure available with them. No efforts seem to have been made by the Ministry in this regard apart from submitting that data sharing between CBEC and CBDT was being examined," the panel said in its report.
"Apparently the Ministry seems to be slow on recovery of penalties from the defaulters. Taking note of the service tax voluntary compliance encouragement scheme of 2013 aiming to give an opportunity to the non-filers to make payment of service tax dues ... The Committee recommend the Ministry to have a close and effective monitoring of the scheme," it said.
Further, the panel said Ministry is conspicuously silent on the issue of irregular utilisation of Cenvat credit and it needs explanation for that.
"The Committee recommend that the Ministry examine other cases wherein Cenvat credit has been availed to ensure that such irregularities have not occurred."
Service tax on the banking and other financial services levied from July 2001 has been a major contributor to service tax revenue.
Its contribution to total service tax collected during 2007-08 and 2008-09 was 7.09 per cent (of Rs 51,301 crore) and 6.15 per cent (of Rs 60,940 crore) respectively.
However, the report said there were several procedural deficiencies in registration of assesses, receipt of returns and scrutiny of returns besides, instances of non-compliance with rules, incorrect or excess availment and utilisation of Cenvat credit, non-remittance of service tax that resulted in revenue leakage.
