*Service Tax evasion continues to grow despite punitive provision

Bhubaneswar, 24/6 : The service tax evasion in the state will continue to be a worrying factor despite the growth in the collection in the indirect tax collection. The audited service tax evasion stood at Rs 484 crore this year which is similar to last year’s figure of Rs 502 crore due to the lack of punitive action against defaulting companies or organisations.

While the evasion amount continues its parade, the industry experts feel that the toothless action against these defaulting units gives confidence and will be detrimental in the long run.

Customers pay for Indirect Tax like Service Tax, Central Excise and Customs duty at the time of purchase of goods and services. It is important that the top service tax evaders are still evading arrest despite the provision made in 2013 which gives power to the authority to arrest without any court order after the defaulting amount crosses Rs 10 crore.

“We are taking little soft approach towards the big defaulters as these matters involve lot of legal and other issues,” said Mr Sushanta Kumar Panda, Chief Commissioner (CEC&ST), 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 will contribute to 35% of the service tax.

According to market watchers, the tax officials have been lenient on the big tax defaulters like OSL Ltd, East Coast Construction and Rukmani Infrastructure and many others. According to them, nearly 20 big companies in Odisha have defaulted more than Rs 170 crore while the small units have defaulted the similar numbers. However, number of these small companies is very high.

A raid conducted by a high-level team lead by Mr Rajiv Sahu unearthed Rs 700 crore evasions in 28 establishments in the east zone. This includes evasions by OSL Ltd. The local office issued a show cause notice to OSL on the ground of wrong quantification. The other big defaulters caught during the raid were Rungta Sponge, Kamla Aditya Constructions, TMT Bars and many others.