New Delhi: For the first time, the Finance Ministry has started sending letters to service tax, customs and excise duty defaulters asking them to come clean on certain dubious transactions carried out by them.
The letters are being issued by two lead intelligence agencies under the Finance Ministry--Directorate General of Central Excise Intelligence (DGCEI) and Directorate General of Revenue Intelligence (DGRI) -- and Commissionerates of Service Tax and Central Excise, spread across the country, officials said.
The DGCEI is sending the letters to service tax and excise duty defaulters and the DGRI is issuing these correspondences to suspected customs duty evaders, they said.
The letters are being sent to an entity or an individual to seek clarification on a financial transaction, red flagged by economic intelligence agencies as black money or seen as an attempt to dodge authorities from paying taxes, carried out by them, they said.
The number of letters issued to the entities were not immediately known.
It is for the first time that such letters have been issued to indirect tax defaulters, a senior Finance Ministry official said, adding that the Income Tax department has been issuing such letters to direct tax dodgers.
The Finance Ministry has decided to go after about 12 lakh service tax assesses who had stopped filing returns. The Ministry officials are also focusing on top 100 excise duty assessees in the country to ensure that there is no evasion towards the indirect tax collection kitty.
There are 1.2 lakh excise duty assessees across the country. Whereas, there are 17 lakh registered assesses under the service tax.
The aim behind sending such letters is to remove bureaucratic hassles and develop faith in people about tax authorities, the officials said.
Under this process, those getting the letters need not to appear in person before the tax authorities but need to furnish information on the queries sought from them.
The idea to send such "polite letters" is the brain child of Finance Minister P Chidambaram, they said.
Chidambaram had advised DGCEI and DGRI to consider issuing polite letters to entities, reported in a Suspicious Transaction Report (STR) issued by the Financial Intelligence Unit (FIU) -- an agency tasked with analysing and disseminating information relating to dubious transactions.
An STR involves a transaction of Rs 10 lakh and above, which gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime and black money.
The officials said a person or company on receipt of such letters can attach relevant documents as proof against a suspected transaction, earmarked by FIU or other intelligence agencies, while writing back to the authorities.
The Finance Ministry feels that sending these letters will help in checking tax evasion and result in more voluntary filing of returns by such dodgers.
The Finance Ministry had from May this year implemented one-time amnesty scheme--Voluntary Compliance Encouragement Scheme (VCES) -- for service tax defaulters to pay their dues without any penalty or late payment charges.
The Finance Ministry has set indirect tax collection target of Rs 5.65 lakh crore for 2013-14, up from Rs 4.73 lakh crore in the last fiscal.