The Finance Ministry has urged public sector enterprises to ensure that service tax forked out by them to their service providers are paid to the exchequer.
“I have written a letter today to the Chairman and Managing Director of public sector enterprises to ensure that service tax collected on the services availed by them are deposited with the Government,” Sumit Bose, Revenue Secretary, said at a post-Budget meeting organised by PHD Chamber of Commerce and Industry here on Tuesday.
Several service providers, including telecom companies, collect service tax as part of their regular billing, but do not deposit the collected taxes to the exchequer.
Budget 2013-14 has made non-deposit of service tax of Rs 50 lakh or more a cognisable offence. This has put trade and industry in a spot as they fear harassment, given that this provision could be misused and lead to their arrest.
Central Board of Excise and Customs (CBEC) Chairperson Praveen Mahajan sought to allay the fears of trade, stating that enough safeguards were in place to ensure that the provision was not misused.
“We have ensured that the power of arrest is vested with a high ranking official at a level of commissioner. Please have faith in us. Penal provisions were already there. We have only made the offences cognisable. The number of arrests as a percentage of offences is below one per cent”, she said. Mahajan also said that CBEC, in the run-up to Budget, was caught in a dilemma between growth and inflation.
“Our basic thrust is to have stable tax system and, therefore, we resisted the temptation of hiking tax rates to 14 per cent,” she said.
Srivats.kr@thehindu.co.in