Abatement - Central Excise and Service Tax
Under Section 4A of the Central Excise Act, abatement is given from the MRP to determine the assessable value. Similarly in Service Tax, abatement is given from gross receipts for determining the taxable value. The amount of abatement has always been a bone of contention with even the CAG finding fault with the government for allowing more abatement than what was required and the trade feeling that the abatement is too low. The Government had appointed a Committee to advise on the quantum of abatement.
The Government has been receiving several representations but the Advisory Committee on Abatement is unable to examine and take a view on such requests in the absence of required data supporting such claims.
In order to enable the Advisory Committee on Abatement to take a view on such requests expeditiously, the government wants that any request relating to abatement either for excise duty or service tax purposes needs to be sent along with the information in support of the claims and the supporting books of accounts. The information furnished is to represent and cover the different sections of the industry and is to be complete. In addition to other relevant information, the following information also needs to be furnished:
• Trade practice on sale pattern and the nature of trade margins and discounts.
• Calculation based on the actuals of different segments of the industry (small, medium and large) and of recent data.
Obviously the Committee is going to have a long life. DDT 107 on 4th May 2005 had suggested that 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
F.NO.354/30/2005-TRU dated 6th September, 2005.