Bangalore, Dec 4 (IANS): Stringent action would be taken against service tax defaulters if they did not declare under the voluntary compliance encouragement scheme (VCES), Union Finance Minister P. Chidambaram said here Wednesday.

"As only less than half (seven-lakh) of the total 17 lakh registered pay service tax regularly and sincerely, strict action will be taken against the defaulters," Chidambaram said at a day-long interactive session with traders and business chambers.

Asserting that the scheme was a fair offer, the finance minister said the objective was to encourage disclosure of tax dues and compliance of service tax laws by those who have not paid service tax October-December 2012.

"All the tax payers should make a declaration under VCES by December 2013. A committee will be formed to examine the rejected declarations," he said.

Noting that the scheme had elicited an encouraging response in the city, as evident from 432 declarations with Rs.156 crore outstanding, Chidambaram said the zonal tax office ranked third in the all-India list of compliance.

Minister of State for Finance (Revenue) J.D. Saleem, Revenue Secretary Sumit Bose, Central Board of Excise and Customs Chairman Praveen Mahajan and CBEC Member (Service Tax) Majumdar Roy Chaudary were present on the occasion to clarify doubts and explain the provisions of the scheme.