NEW DELHI: The "interesting business" of tax evasion and avoidance, as Finance Minister P. Chidambaram put it the other day, is going to become more difficult and risky. With the passage of the Taxation Laws (Amendment) Bill, 2005, which he introduced in the Lok Sabha on Thursday, authorities will have the powers to attach the property of company proprietors who default on payment of excise duties.

The Bill seeks to provide for "provisional attachment of property" of persons on whom notices have been served for dues. For this, the Government has sought the insertion of a new Section 11DDA in the Central Excise Act.

The Bill also provides for voluntary payment, within 30 days of receipt of a notice, by a producer or manufacturer or any other person who has been issued with a show-cause notice for duty evasion by fraud, suppression of facts and wilful misstatement or for erroneous refund.

The person evading payment will have the option of paying 25 per cent of duty specified only if the payment is made within 30 days of receipt of the notice. The tax authorities will terminate the proceedings against the person who has paid the penalty within 30 days.

The Bill provides for publication of information on any proceedings or prosecution under the Act. This would include the names of the directors, managing agents, secretaries, treasurers, managers or partners of the defaulting firms.

In direct taxes, the Bill seeks to make mandatory the filing of income-tax returns by charitable institutions even if their annual receipts are below Rs. 1 crore.

It seeks to amend the Income-Tax Act to streamline the approval and monitoring of scientific research associations too.

Corrective amendments

The Bill has taken into consideration suggestions on amendment of the direct and indirect tax laws to rationalise and simplify the rules and procedures while widening the tax base by plugging loopholes leading to revenue leakage.

Accordingly, corrective amendments are proposed in the existing legislation.

To stop tax evasion at the first stage itself, the Bill, according to its statement of objects and reasons, seeks to make it compulsory that any amount exceeding Rs. 20,000 payable by charitable institutions is transacted through cheque or bank draft.

Dispute resolution

The Bill seeks to amend the indirect tax laws so as to facilitate voluntary payment of dues. This is intended to provide a mechanism for resolving disputes at the earliest to facilitate speedier recovery of excise and customs dues.

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