Failing to deposit services tax may now attract arrest and imprisonment for up to 7 years. With the passage of Finance Bill 2013 last week, the revenue department officials can now arrest a person for non-payment of collected service tax.
Earlier, the officials did not have any power to arrest a person for service tax evasion. Besides, director and manager of a company who fail to pay collected service tax can now be arrested with imprisonment for up to 7 years in addition to the penalty which may extend to Rs 1 lakh.
This is for the first time that service tax rules have been amended to attract the Criminal Procedure Code (CrPC) in line with customs and central excise.
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The Section 91, which was incorporated in this year's Finance Bill, provides power to arrest a person for non-payment of collected service tax, by an officer not below the rank of Superintendent of Central Excise.
The Bill, which was passed on May 10, also imposes a penalty on a person or company liable to pay service tax and fails to take registration number from the government.
"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," it says.
In the case of the offence, where the amount exceeds Rs 50 lakh, a defaulter will get imprisonment for a term which may extend to 7 years.
There has also been changes in provisions of the Central Excise Act, 1944.
"The offences relating to excisable goods where the duty leviable thereon under this Act (excise) exceeds fifty lakh and punishable... shall be made cognizable and non-bailable (arrest without court warrant)," it said.
The limit of evasion, where arrest provision can be invoked, has been extended to Rs 50 lakh from Rs 30 lakh in terms of excise and customs duty.
During 2011-12, 527 commercial frauds in service tax were detected out of which 26 persons were arrested. In 2010-11, 581 cases of fraud were detected by Directorate General of Revenue Intelligence and 64 people were arrested. The Finance Ministry has detected custom duty and service tax evasion of at least Rs 400 crore between January and March this year.
Indirect tax evasion of Rs 2,600 crore was detected between October and December last year by the Revenue department.
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