FinMin urges PSE to deposit collected service tax

In a move to have to have stable tax system, the finance ministry has urged public sector enterprises to ensure that service tax collected on the services availed by them are deposited to the exchequer. Several firms including telecom companies, collect service tax as part of their regular billing, but do not deposit the collected taxes to the government. 

In FY14 Budget, the government has made non-deposit of service tax of Rs 50 lakh or more a cognisable offence, which could lead to the arrest. This provision has put trade industry in a spot as they fear harassment, given that this provision could be misused and lead to their arrest.

However, to allay fears of trade, Central Board of Excise and Customs (CBEC) chairperson Praveen Mahajan said enough safeguards were in place to ensure that the provision was not misused. The basic thrust is to have stable tax system and, therefore, we resisted the temptation of hiking tax rates to 14 per cent.

By adding further she said, ‘we have ensured that the power of arrest is vested with a high ranking official at a level of commissioner. Penal provisions were already there and we have only made the offences cognisable. The number of arrests as a percentage of offences is below one per cent.’