Audit Reports
Indirect Tax
Report No. 9 of 2013 - Performance Audit of Levy and Collection of Services Tax on Import of Services of Union Government, Department of Revenue-Indirect Taxes, Services Tax
Overview
The department does not have a mechanism to arrive at a reliable estimate of value of taxable services imported. The department has however, initiated steps (since November 2011) to utilise primary data available with authorised dealers; the process is ongoing. The department did not have any prescribed specific accounting codes or any alternative mechanism to arrive at reliable figures of the taxes collected relating to import of services. The system was not robust enough to provide information on the gap between the collectible tax and the tax actually collected.
The department did not have a system to utilise data available with the Income Tax department relating to remittances to NRIs. RBI permits remittances towards import of services irrespective of non-fulfilment of corresponding service tax liability by the service recipient, in the absence of any requirement for submission of an undertaking by remitter/certificate from Accountant on the lines of the prescription in Income Tax.
There was no system of calling for an Annual Information Return from identified parties such as authorised dealers. Non-fulfilment of liability by export oriented units and associated enterprises indicated the need for strengthening of monitoring on this front. The department did not have in place a system to utilise data on high value transactions of specific nature available with certain Central Ministries/RBI to check possible cases of evasion of tax.