As tax collection dips, taxman pitches for auction of defaulters’ attached assets

Tax authorities intend to auction the attached assets of indirect tax defaulters. This is part of a new strategy to increase collection of indirect tax revenues, which are now way below the Budget’s target. Indirect taxes comprise customs duty, excise duty and service tax.

“Apart from attachment and auction, the strategy has four elements: integrated and risk-based audit, adjudication in a time-bound manner, unit-based scrutiny and enforcement on evasion-prone areas,” a senior Revenue Department official told BusinessLine . The strategy was discussed at a meeting chaired by Finance Minister Arun Jaitley on November 8.

The strategy assumes critical importance because of the poor indirect tax revenue collection. While the targeted growth rate is 25.8 per cent or a total collection of ₹6.23 lakh crore in 2014-15, the mop-up in the April-October period was ₹2.85 lakh crore, a growth of just 5.6 per cent. To achieve the target, tax collection in the remaining five months of this fiscal year needs to grow by around 49 per cent.

The official said tax authorities have legal provisions for attachment and auction. In fact, attachments have been made in various cases, but there is hardly any auction.

“The effort now will be to act upon various provisions in a more effective way, so that these can act as a deterrent against wilful default,” the official added.

In terms of audit, the Central Board of Excise and Customs (CBEC) has already constituted a separate commissionerate, which will look into two key issues: integrated and risk-based audits.

Integrated audit means combining excise duty, custom duty and service tax, and risk-based audit refers to selection of units to be audited after using multiple parameters derived from the ACES (Automation of Central Excise and Service Tax) portal. The portal provides e-governance to excise duty and service tax assessees.

However, there are issues around adjudication. The official said time-bound adjudication needs more manpower, especially of commissioner rank. “The process of appointing 77 commissioners is yet to be completed, which could impact time-bound adjudication,” he said.

The department has also prepared a formula called 10:25:100. The first numeral refers to 10 key result areas, the second refers to the top 25 commodities and services in terms of revenue collection, while the third is for continuous interaction with the top 100 taxpayers.

Keeping this formula in mind, the role of large taxpayers will be critical in revenue augmentation.