Excise, service tax evasion of Rs 5,000 crore in FY'11

There has been a 14 per cent increase in quantum of black money detected in 2010-11 in comparison to previous year

PTI | May 19, 2011



Tax sleuths unearthed central excise and service tax evasion amounting to over Rs 5, 500 crore in the 2010-11 financial year, even as pressure mounted on the government to crack down on black money.

Unravelling the trail of the ill-gotten wealth, taxmen were able to recover Rs 431 crore in search-and-seizure operations during the same period, official data shows.

The number of cases of central excise and service tax evasion is on the rise, as per the data, with a 14 per cent increase in the quantum of black money detected in the 2010-11 financial year in comparison to the previous year.

While the intelligence wing of the central excise department registered cases of duty evasion amounting to Rs 1,356 crore in FY'11, cases of evasion totalling an amount of Rs 4,352 crore were registered under the service tax category, during the same period.

A total of 1,190 cases were registered by the directorate general of central excise intelligence (DGCEI) in the previous financial year.

This translates into a 29 per cent increase in the number of cases detected by the DGCEI in 2010-11 compared to the previous year. What is more, the quantum of black money from central excise and service tax evasion rose by 15 per cent during the period under review, the official data shows.

According to sources, tax evaders used clandestine methods like removal of goods without payment of duty, misuse of input credit schemes and wrongful availment of exemption notifications and undervaluation of excisable goods to hide and evade central excise duties.

On the service tax front, the evaders undervalue taxable services and misuse input credit schemes and exercise non-payment or short payment of service tax under the reverse charge mechanism, while instances of service tax collected but not deposited to the government exchequer have also been noticed, they said.

Indirect tax collection -- comprising customs, central excise and service tax -- in the 2010-11 fiscal amounted to Rs 3.42 lakh crore. Out of this, service tax and central excise accounted for 61 per cent of total indirect tax collections.

The DGCEI is the nodal intelligence agency for detection of cases of evasion of central excise duty and service tax.

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