Excise and service tax evasion to the tune of Rs. 5700 crore has been unearthed by the revenue intelligence department of finance ministry in last one year. The govt. has initiated action against such companies and has already collected recoveries to the tune of Rs. 450 crore. 1200 cases related to duty evasion has been registered in the financial year ending March 2011 amounting to Rs. 5700 crore.
The service tax front has reported the highest duty evasion of Rs. 4300 crore which may go up to Rs. 10,000 crore if the penalties are levied on these defaulters. Evasion of more than Rs 1,350 crore has been detected on account of wrongful Cenvat credit and excise duties.
India telecom, banking and financial sectors importing services such as hiring consultants and specialized services have been the biggest defaulters in evasion of duty payments.
Major amendments in the Cenvat credit rules have been introduced by the finance ministry to plug the loopholes on duty evasion.
The definition of input goods has been modified by including all goods used in the factory by the manufacturer of the final product as inputs excluding items specified in the negative list.