VCES 2.0 - Voluntary Cancellation Encouragement Scheme!
IT is not surprising that non-filers and stop-filers have mounted in service tax. The number exceeds 12 lakh or so. We are targeting them
Said the FM while inaugurating the CBEC Chief Commissioners' conference. While no one can have any doubts on these numbers given to the FM in beautifully tabulated brochures, the conclusions drawn from such numbers that they are all evaders may require a careful study.
It seems everyone is under the mistaken impression that all non-filers/stop filers are evaders and Government can get revenue by catching them er… targeting them. Actually they are not There are a number of reasons why the department has so many lakhs of registrations in records, while active assessees represent only a small percentage. The biggest blunder while introducing service tax levy was perhaps not providing any threshold exemption. It was a very very stupid idea to collect service tax even from a beauty parlour / laundry/ cable operator having a turnover of Rs 100/-. Targets were given to officers for roping in more assessees and registration melas were conducted. Realisation dawned only after a few years and threshold exemption was given. Now, many registered assessees would have been covered under threshold limits, but surrendering registration is not an easy task. So, the so-called stop-filers / non-filers may include these. May be a few lakhs.
Further, for bidding any small time contract, the tender conditions include service tax registration, which is treated like an Aadhaar Card by many companies especially the public sector ones. So, many assessees though small, and need not pay Service Tax, obtain registration only for the sake of having a BADGE called Registration Number. Some assessees, though small, pay tax as it is reimbursed by the service receiver and then they go back to exemption in next year. They don't surrender registration as the COST for surrendering a registration is as high as (if not more)for obtaining registration. The real evaders are never registered with the Department. After all, why would anyone leave their PAN, Address and other details with the Department and then start evading? It is elementary Mr Watson!
As a one-time measure, the Government should declare that all registrations for which no return had been filed for two consecutive years shall be deemed to be cancelled. We can name it as VCES 2.0 - Voluntary Cancellation Encouragement Scheme. They should be removed from the database. At least this would reduce the non-filers and stop filers and the top brass need not lose their sleep on these numbers and focus on real evaders.