Abatement under Central Excise and Service Tax – Advisory Committee set up.
Under Section 4A of the Central Excise Act, an abatement is given from the retail price to decide the assessable value for paying the tax. This abatement has been quite controversial with industries demanding higher abatement and Government conceding quite often. But Audit is a spoil sport and they have been raising objections that the abatement given is too high. Similarly in Service Tax, abatement is given to fix the value of taxable services.
In his Budget speech the Finance Minister had announced that a Committee would be set up to advise the Government on the quantum of abatement to be given. Now the Finance Ministry has constituted the Committee under the Chairmanship of the CBEC Member (Central Excise) with the Member (Service Tax) as Co Chairperson . The JS TRU will be the Member Secretary. The Committee can co opt officers from the concerned ministries as members and take members from the trade and experts as special invitees. The whole process of determining the quantum of abatement is going to be more transparent. They should take a member from the CAG’s office and take an assurance from him that no audit objection will be raised on the abatement issue after the Committee has taken a decision.