The Financial Intelligence Unit (FIU), country’s nodal agency for gathering, analysing and disseminating information related to suspicious financial transaction, has been asked to work with the Directorate General of Central Excise Intelligence (DGCEI) to go after over 65,000 non-filers of service tax returns, who have managed to escape the scrutiny of the government so far.
Finance minister P Chidambaram has also asked the DGCEI “to make available some unique identifier” to track evaders of both the service tax and central excise duty.
Sources told The Indian Express that the finance minister had questioned the DGCEI in a meeting held last month as to “why is Permanent Account Number is not mandatory for registration under excise department or customs department and why should not it be made mandatory?”
The reason for the query was simple. In the absence of any unique identifier, the intelligence unit has not been able to process a list of 557 defaulters of excise duty handed over to the finance ministry, as the names of these defaulters do not figure in the government’s data base.
“While running the data through its database, the FIU found that absence of PAN-like unique identifier has ensured that these defaulters leave no trail. The finance minister asked the DGCEI to work towards making available some kind of unique identifier,” the source said.
As to the list of defaulters handed over to the FIU by the DGCEI, Chidambaram has ordered both the agencies to look into the issue and “the result of these exercises would be evaluated jointly by the FIU and DGCEI,” the source added.
It is to be noted that the DGCEI is the nodal agency for detection of cases of evasion of excise duty and service tax. It is tasked with developing intelligence and disseminates information by issuing modus operandi circulars and alert circulars to appraise field formations of the latest trends in duty evasion.
However, roping in the FIU to go after evaders shows the graveness of the situation of evasion in the excise, customs and service taxes, the source added.
At present, although PAN number is compulsory for registering with excise and service tax department, in many cases, temporary registration is also given. That is, the source added, is the root of the problem as the temporary registration does not get converted into permanent registration.
In the meeting, Chidambaram also observed that since the cash transaction reports (CTRs) given by the FIU are a threshold-based report, the CTR database shows matches for big cases only.
“Therefore, a unique identification is required for the excise department as well,” the source added.
PAN is compulsory for all who file their income tax returns. In fact, it has now been made mandatory to quote PAN in all documents pertaining to financial transactions notified from time to time by the tax department including sale and purchase of immovable property, motor vehicle or cash payments above a certain limit.