The government on Monday advised tax evaders to either clear their dues by Tuesday or face stern penal action, including arrest and prosecution.

Revenue Secretary Sumit Bose said that the government would start taking stern action against service tax evaders from January 1, 2014.

Speaking to reporters, Bose said, "I would like to advise that from January 1, 2014 stern action will be taken against service tax evaders and provisions in the Finance Act relating to arrest and prosecution will be enforced in right earnest."

Bose's comments came as the government's Voluntary Compliance Encouragement Scheme (VCES) is just a few hours away from its end. The VCES, which was announced by Finance Minister P. Chidambaram in the budget 2013-14 to encourage tax evaders to clear their dues, is all set to end today, December 31.

The tax amnesty scheme provides a rare opportunity for self-declaration and payment of tax dues from October 1, 2007 to December 31, 2012. Defaulters are allowed to declare their service tax dues and pay 50 per cent of the total amount by December 31, 2013. The remaining half is payable without interest by end of June next year and with interest by end of December 2014.

According to sources from the service tax department, the total number of applications filed by defaulters by 23rd of December stood at 21,685 with tax implication of more than Rs 3,761 crore.