Date:08/03/2007 URL: http://www.thehindu.com/2007/03/08/stories/2007030807671900.htm

Business

FM warns corporates against excise evasion

Special Correspondent

`One black mark will haunt you throughout the year'

Photo: Rajeev Bhatt

EASIEST SCHEME: Union Finance Minister P. Chidambaram flanked by Chairman, CBEC, V. P. Singh (left), and Revenue Secretary, Chandra Sekhar, during the launch of the Electronic Accounting System in Excise and Service Tax (EASIEST) in New Delhi on Wednesday.

NEW DELHI: The Union Finance Minister, P. Chidambaram, on Wednesday warned corporates against evasion of excise duty while noting that non-payment of the tax would "haunt" them in the long run.

Speaking after launching the `Electronic Accounting System in Excise and Service Tax' (EASIEST) here, Mr. Chidambaram said: "I am inclined to believe that there is sizable evasion in excise duty. I would urge corporates to pay excise duty just as they are paying corporate income and service taxes... Evading duties does not pay in the long run. One black mark will haunt you throughout the year."

From April 1 this year, it would be mandatory for all assessees paying excise and service tax, totalling Rs. 50 lakh and above annually, to make the payment through e-mode, Mr. Chidambaram said. He pointed out that in course of time everyone would be required to use the "most convenient" e-payment mode as the ultimate goal was data collection synergy in direct and indirect taxes.

Trying to find an answer as to why excise collections were not keeping pace with the growth in the manufacturing sector, he said: "When the economy is growing at 8.5-9 per cent and [the] manufacturing [sector] by double digits, excise collections should also grow at the same rate."

This did not happen and, in fact, the Finance Ministry was forced to scale down its excise duty collection target to Rs. 1,17,266 crore for the current fiscal from the earlier estimate of Rs. 1,19,000 crore. Noting that there was no explicable reason why the growth in revenue mop-up through excise was not in keeping with the steep rise in corporate income tax and service tax collections, Mr. Chidambaram announced that this aspect would receive focused attention during 2007-08 with both hard and soft measures in place to address the problem.

The EASIEST scheme — introduced by the Central Board of Excise and Customs (CBEC) in association with the Principal Chief Controller of Accounts, the Reserve Bank of India (RBI) and 28 scheduled banks — has been conceptualised to address the weaknesses in the existing manual tax accounting system.

While the manual system required the taxpayer to file four copies of the `challan', the e-mode system would require only a single challan to capture all the essential information required from the assessees in relation to their tax payments.