Allaying fears of the industry over introduction of harsh provisions in the service tax rules, a senior Finance Ministry official has said they will be used sparingly against willful defaulters.

“Prosecution is not something that is necessarily going to be lodged in service tax issues. It will be resorted to only in very limited matters and that too in very rarely defined aspects of willful defaulters,” Revenue Secretary Sunil Mitra said while replying to the concerns raised by the industry here.

Finance Minister Pranab Mukherjee in the Budget proposed provisions for prosecution of service tax defaulters and raised the penalty for delay in filing of return from Rs 2,000 to Rs 20,000.

The philosophy behind the new provisions, Mitra said, is to give incentives for voluntary compliance and punish “willful defaulters”.

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