Despite the strong growth in service tax revenue, taxmen are keeping a close watch on six crucial sectors that have witnessed a dip in collections. These include services provided by the telecommunication industry, air travel agents, tour operators, cost accountants, convention and forward contracts.
The Central Board of Excise and Customs (CBEC) has asked field formations to closely monitor these sectors and ensure there is better compliance in the current fiscal. ?Since the required growth rate for the current year is over 26% of the revenue collected during the last financial year, it would be necessary to keep a check on such non-performing services’ right from the beginning,? it said in an internal circular.
The issue was also discussed at the recent conference of chief commissioners and director generals of the CBEC, where the officials were asked to come up with suitable strategies for monitoring. Official sources said that while service tax compliance is mostly voluntary, this year onwards the department plans to conduct more audits on these sectors to ensure they pay their taxes.
The growth in collections from tax in the telecom sector, dipped by 3.7% to fall to Rs 5,814.8 crore in 2007-08 as compared to Rs 6,036 crore a year earlier. Similarly, collections from convention services dropped by a massive 26% to a mere Rs 27.6 crore in 2007-08 as against Rs 37.2 crore in 2006-07.
The most significant decline in revenue was however, recorded from the services provided by cost accountants where collections fell by 61.6%. The department collected only Rs 6.8 crore from the sector in the last fiscal, as compared to Rs 17.7 crore netted in 2006-07.
Incidentally, while the collections from these industries were negative, revenue from service tax as a whole, rose by over 30% last fiscal to amount to Rs 51,113 crore. For 2008-09, service tax collections are pegged at Rs 64,460 crore.
Other sectors where there was a marginal increase in collections in 2007-08 are also being closely watched. These include general insurance premium, courier services and clearing and forwarding agents where service tax collections rose by a little over 13%.
Likewise, customs house agents, mandap keepers and insurance auxiliary services provided in relation to life insurance are also under the tax men?s scanner as they grew by a mere 6% to 7% last fiscal.
It may be noted that the service tax commissionerate has sent a number of show cause cum demand notices to telecom giants such as Airtel and Vodafone, airlines companies like Lufthansa and other corporates to pay up pending dues.