With the Voluntary Compliance and Encouragement Scheme (VCES) coming to an end on Tuesday, the Union government has warned service tax evaders of “arrest and prosecution” from January 1.
“I would like to advise that from January 1, 2014, stern action will be taken against service tax evaders, and the provisions of the Finance Act relating to arrest and prosecution will be enforced in right earnest,” Finance Secretary Sumit Bose told journalists here on Monday.
There are 17 lakh registered service tax assessees in the country, but only seven lakh file returns regularly. The government has asked tax officials and sleuths to find out establishments and shops that have failed to pay up service tax, so that action could be taken after the expiry of the scheme. “In Delhi, leads will be dug out from sources of information such as the Delhi Government under the Shops and Establishments Act…,” official sources told The Hindu. “Delhi has 70,000 service tax assessees, but at least 1.5 lakh-2 lakh registered businesses.” Mumbai has 1.1 lakh service tax assessees.
The Finance Secretary said there had been an “overwhelming response” to the VCES in the last four days: 16,000 applications received for payment of Rs. 1,500 crore in tax dues.
Till December 29, 40,000 declarations, involving more than Rs. 5,500 crore, had been made.
“This would broadly correspond to Rs. 55,000 crore in services, which had escaped the tax net,” Mr. Bose said.
The scheme would not be extended, Mr. Bose said, as its duration was laid out in the Finance Act.
The service tax offices will be kept open beyond working hours on Monday and Tuesday. The government has extended the banking hours in the designated branches till 6 p.m. on December 31.
In addition, all Commissionerates have been advised to accept demand drafts/ payorders submitted by declarants under the Receipt Payment Rules.
The VCES lets declarants pay half of the declared tax dues for the five-year period (October 1, 2001 to December 31, 2012) by December 31 and the rest in another six months without interest.