Central Board of

Excise & Customs

Revenue Performance, Expectations and Constraints

CC Conf. Service Tax Presentation 1

A Presentation on

Service Tax

Revenue Performance

Audit & Enforcement Achievements

Areas of Concern and Action Plan :- Stop

Filers, Adjudication, Arrears, Defaulters &

Scrutiny of Returns

Constraints and remedial measures

Presentation Schema

2

3

Service Tax Revenue

Year Target Actual

Collection

Increase/Decrea

se over previous

period

Percentage

Increase /

Decrease over

previous period

2009-10 58000 58319 -2383 -4

2010-11 69400 71191 12872 22

2011-12 95000 97356 26165 37

Up to July'11 27212

2012-13

(Upto July'12)

124000 38070 10858 40

[in Crores ]

4

Top 10 Services (Amount in Crores)

Sr

No

Service Revenue

2011-12

Up to

July'11

Up to

July'12

Percentage

Increase

1 Telecommunication 5098 1300 2047 57

2 Banking & other 5263 1374 1619 18

3 Business Auxiliary Service 5071 1326 1699 28

4 Insurance 4461 1271 1935 52

5 Business Support Service 4176 843 1319 56

6 Renting of Immovable Property 4134 936 1490 59

7 Works Contract 3674 919 1219 33

8 Manpower Recruitment Agency 3433 884 1287 46

9 Maintenance & Repair 3104 786 1049 33

10 Transport of Goods by Road 3157 834 1115 34

TOTAL 41571 10473 14779 41

Top 10 Services contribute 43% of the total ST collection

5

Anti Evasion Performance (Commissionerates & DGCEI)

Period No of cases Amount

detected

Amount

Realised

2010-11 4172 8244 953

2011-12 4394 10435 1773

2011-12 ( Upto June'11) 806 2997 222

2012-13 ( Upto June‘12) 1427 4185 563

% growth in current

year

(+) 77 % (+) 40 % (+) 153 %

[ Amt. in Crores ]

i) Commissionerate performance - DGST MTR compilation

ii) DGCEI for their performance

6

Audit Performance

Period No of units

Audited

Amount

Detected

Amount

Realised

2010-11 12979 7389 1155

2011-12 11724 6972 1326

2011-12 (Up to June'11) 2659 2242 260

2012-13 (Up to June'12) 2489 1227 347

% growth in current year (-)6 (-)45 (+) 33

[ Amt. in Crores ]

Service Tax Important Facts

Total number of registered assessees 16.17 lakhs

Total number of active assessees 6.5 lakhs

New registrants 2010-11 1.67 lakhs

New registrants 2011-12 1.99 lakhs

New reg. filed from April to July'12 90539

Exclusive Service Tax Commt’s 7

Revenue contributed by 7 Commt’s

[66,358 Crores]68%

% of All India Active Assesses in 7

Commt’s45 %

Asssessees paying > 1 Crore revenue 9265

7CC Conf. Service Tax Presentation

STOP FILERS• Reasons for gap between Registered &

Active Assessees

• Exemption threshold, Taking ofCentralized Registration, Registration fornon Service Tax purposes, Defaulters /Evaders.

• Enquires initiated but in large number ofcases, assessees not found / not responding.

• Considering huge number of stop filers andmeager staff for Service Tax, it is not feasibleto verify all cases

• PAC Also took up this issue.8CC Conf. Service Tax Presentation

Stop Filers : Action Plan

•Obtaining Income Tax Returninformation to find out turnover forfirms / companies filing ITR

•Getting information from IncomeTax offices at local level is verydifficult. Hence, SystemsDirectorate of CBDT may bedirected to provide requiredinformation.

9CC Conf. Service Tax Presentation

Adjudication Pendency

10

Adjudication

Authority

0 to 3

months

3 to 6

months

6 to 12

months

> 1

year

No Amount No No No No

Commissioner 5179 45793 1353 502 1692 1632

Additional / Joint

Commissioner

6310 1178 1997 883 2258 1172

Deputy / Assistant

Commissioner

10928 271 4756 1706 2485 1981

Superintendent 1444 112 460 403 203 378

CC Conf. Service Tax Presentation

Adjudication pending with 7 Service Tax Commissioners.

2726 cases amounting to Rs 32145 Crores.

During 2011-12, the 7 Service Tax Commissionerates issued

2053 SCNS answerable to Commissioner

[in Crores ]

Steps to Reduce intake of SCN’s-1

• On payment of Service Tax & InterestNo SCN, except in case of intentionalevasion – instructions to be issued oramended in Section 73.

• Even if an appeal filed against Tribunalorder by one office, other can followthat order, subject to appeal at the levelof CC-instructions may be issued.

11CC Conf. Service Tax Presentation

Steps to Reduce intake of SCN’s-2

•Section 73(5) provides for paymentof penalty of 1 % Tax per month tosettle a case. Proposal to increaserate of interest from 1.5% to 2.5%

•For revenue neutral transaction(person liable to pay is also entitledfor Cenvat Credit), cases to beclosed on payment of Service Tax& Interest.

12CC Conf. Service Tax Presentation

Steps to expedite Adjudication of Pending SCNs

• 96% amount locked up at Commissioner’s level

• Annual intake of > 2000 cases in 7 Service TaxCommissionerates.

• Commissioner (Adj) posted at Mumbai & Delhi.

• Divert 6 Commissioner (Appeals) for Service Tax work.

• Proposed to post extra Commissioners - Mumbai-I (2),Mumbai-II (1), Delhi (2), Chennai (1).

• New Commissioners also to look after other work like review,legal etc. to spare regular Commissioner for revenuemobilization tasks.

• Increase monetary limit of power of adjudication at JC / ADClevel from Rs. 50 Lakh to 1 Crore.

CC Conf. Service Tax Presentation 13

Areas of Concern

[ Amt. in Crores ]

14CC Conf. Service Tax Presentation

Pendency 0 to 3

months

3 to 6

months

6 to 12

months

> 1

year

No Amount No No No No

Refunds 9279 3496 4345 1378 1356 2200

Return

Scrutiny

885304 536266 232803 99595 16640

No of

cases

Amount

involved

Restrained (non recoverable)

arrears (stayed, appeal

pending, BIFR, etc)

Recoverable

Arrears

No Amount No Amount

56250 24388 26183 21870 30067 2518

Arrears Position

Arrears - 1• For cases pending in appeals, a scheme may

be introduced to pay disputed tax and higherrate of interest say 2% per month, to settle acase.

• Alternatively, scope of SettlementCommission may be enlarged to cover casespending before Commissioner (A), Tribunal &Courts for a period of one year.

• For cases pending in appeal where Cenvatcredit is available to noticee himself, casesmay be settled on payment of Service Tax &interest.

15CC Conf. Service Tax Presentation

Arrears - 2• Large number of cases of arrears involving small

amount upto Rs. 5000, mostly penalty for non filingof returns

• Write off provision of Service Tax to be introduced.

• For writing off smaller amount say upto Rs. 10,000/-per case, a simplified procedure to be introduced.

• Project to create a combined online data base of allarrears of Excise / Customs / Service Tax is underimplementation. Before granting refund / drawback,status of arrears would be verified.

16CC Conf. Service Tax Presentation

Defaulters -1• Tax collected but not paid -

Important cases of Airlines andSecurity companies.

• No direct mechanism available todetect defaulters but tax payers notpaying at all or paying substantiallyless can be identified.

• Local level data analysis resulted inrecovery of Rs. _____ Crores in lastone year.

17CC Conf. Service Tax Presentation

Defaulters - 2

• For all India basis monthly MIS isproposed to be issued by DG(systems)

• Deterrent action like non utilizationof CENVAT credit, if tax not paidwithin 30 days, like in CentralExcise (rule 8(3A))

• Additional Staff

18CC Conf. Service Tax Presentation

Negative List

• Aim is to expand tax base,minimize taxability / classificationdisputes and to move towards GST

• Expected revenue increase 10%

• No classification of service – sectorwise revenue analysis not feasible.Hence, it is proposed to obtaininformation for 20 importantservice sectors in the returns.

19CC Conf. Service Tax Presentation

Assessee Base & Revenue visa-a-vis

Staffing Position in Service Tax Commissionerates

[ Amt. in Crores ]

20

Commt’e No. of

regd.

assessees

Revenue

collection

2011-12

Addl. / Jt

Commr.

Dy. /

Asstt.

Commr.

Supdt. Insp.

MUMBAI-I 91079 23181 2 10 164 203

DELHI 203575 20193 4 10 150 178

MUMBAI-II 125746 8352 2 8 87 126

BANGALORE 106737 5034 2 8 86 100

CHENNAI 77291 4412 2 7 111 141

KOLKATTA 51076 3395 1 9 106 126

AHMEDABAD 35582 1791 2 6 85 73

CC Conf. Service Tax Presentation

Revenue Augmentation

• Action against defaulters and stop filers

• Speedy Adjudication

• Identification of evaders and new assessees

• Third party information.

i) DGS data of Income Tax for service providerslike Renting, Commission, Work Contract,

ii) Data of State Excise Authorities to identifyRestaurants liable to pay Service Tax.

iii) Foreign Exchange Payment from AD.

21CC Conf. Service Tax Presentation

Administrative Constraints

• Insufficient staff specially in the ServiceTax Commissionerates.

• Huge pendency of adjudication atCommissioner level.

• One assessing group having about 1500 -2000 active assessees (about 3000registered assessees).

• Because of insufficient staff – audit ofmandatory units not covered.

• Training of staff.

22CC Conf. Service Tax Presentation