CA Sandeep Kanoi

After introduction of self-assessment, the return filed by a taxpayer is the only instrument to check the correctness of central excise duty paid to the government. Graph below indicates that more than fifty per cent of registered taxpayers are not filing returns. Government need to build a strong mechanism to ensure filing of return by all registered taxpayers but it is equally necessary to investigate and analyse why the percentage of return filed is so low compared to the number of registrations.

Percentage of non-filers under central excise

excise non filers

Source: Source: CAG Report No. 8 of 2014 (Indirect Taxes-Central Excise)

The following table depicts the number of registered taxpayers of central excise between FY2009- 13. The growth of registered taxpayers has been negative in FY2011-12 and there is a drop in the number of taxpayers compared to the previous year. However, in FY2012-13 there is a growth rate of 3.73 per cent.

Table 11.20: Tax base in central excise

FY No. of registered taxpayers Per cent growth over
previous year
2008-09 2,95,222
2009-10 3,15,171 6.76
2010-11 3,44,753 9.39
2011-12 3,35,759 -2.61
2012-13 3,48,294 3.73

 Source: CAG Report No. 8 of 2014 (Indirect Taxes-Central Excise)

The top 100 taxpayers (in terms of revenue contribution), comprising oil sector companies, tobacco products, automobile, cement, steel and tyre manufacturers, contribute 70 per cent of central excise revenues. But broadening of tax base is necessary to ensure further growth of revenue. With increasing reliance on voluntary compliance, it becomes important for the department to put in place an effective mechanism to collect information from various sources to identify persons who are liable to pay but have avoided payment and bring them in the tax net. A robust data analysis should form the backbone of such a mechanism. Having identified potential taxpayers, efforts to collect the tax by the department should be devoid of harassment; instead, such effort should be in the form of assistance to taxpayers to comply with law. This approach would promote voluntary compliance.

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Qualification: CA in Job / Business
Company: Taxguru Consultancy / Taxguru Edu
Location: Mumbai, Maharashtra, India
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October 2021