The revenue department is examining the service tax on industry and service providers, particularly in the telecom sector, to ensure that there is no incidence of double taxation, an official of the department said.

"The finance ministry would shortly come out with an announcement to this effect by amending any circular that is capable of double interpretation to ensure that services are taxed only once and not twice," P C Jha, Member, excise and service tax, Central Board of Excise and Customs said at a seminar organised by Assocham in New Delhi.

Jha pointed out that while the growth in the telecom sector was 30 per cent, the service tax collection was a meagre 9 per cent.

"I have issued instructions to the department concerned to look into the issue as the ratio between the growth of telecom sector and that of its service collection is not commensurate," he said.

"The finance ministry intends to collect a total revenue of Rs 4,50,000 crore (Rs 4500 billion) through both direct and indirect taxation in which the share of customs would be around Rs 80,000 crore (Rs 800 billion) and that of excise Rs 1,80,000 crore (Rs 1800 billion). Through service tax imposition, the finance ministry wants to generate a revenue of Rs 40,000 crore (Rs 400 billion) while Rs 2,10,000 crore (Rs 2100 billion) worth of revenue would be generated through the imposition of direct taxes by March 31, 2007" Jha said.

In order to collect the due taxation, the finance ministry has decided to take control of those manufacturing units that are evading excise, customs and other levies, he said, adding that the government would take serious action against defaulters.

Chief Commissioner of Central Excise, C G Lall said the Delhi government was still falling short of its service tax collection target by 58 per cent.

She said that large tax units put up in different zones of Delhi for collecting service tax were likely to be dismantled as service tax payers were not coming forward to pay the taxes.