Service Tax evasion in Odisha will continue to be a worrying factor despite the growth in the indirect tax collection. The audited service tax evasion stood at Rs484 crore this year compared to last year’s figure of Rs502 crore due to the lack of punitive action against defaulting companies or organisations.
While the evasion amount continues to rise, industry experts feel that the toothless action against these defaulting units gives confidence to the evaders. last year, the tax authorities collected only Rs20 crore from the evading companies in the State.
Customers pay for indirect taxes like Service Tax, Central Excise and Customs Duty at the time of purchase of goods and services. It is a matter of concern that the top Service Tax evaders are still evading arrest despite the provision made in 2013 which gives power to the authorities to nab them without any court order after the defaulting amount crosses Rs10 crore.
“We are taking a little soft approach towards the big defaulters as these matters involve a lot of legal and other issues,” said Chief Commissioner, Central Excise, Customs and Service Taxes SK Panda, adding that the department is focusing on increasing the assessee base. The department is now focusing on adding small establishments to the tax net which would contribute to 35 per cent of the Service Tax.
According to market watchers, the tax officials have been lenient on the big tax defaulters. According to them, nearly 20 big companies in the State have defaulted more than Rs170 crore while small units, whose number is very high, have defaulted a similar amount.
A raid recently conducted by a high-level team unearthed evasion of Rs700 crore in 28 establishments in the country’s east zone. This included evasion by a Cuttack-headquartered company, whom the local office issued a show-cause notice. The other big defaulters caught during the raid were a sponge firm and a construction company.