Service Tax - Goods Transport- DGST causes further confusion.
What will the poor assessees do if the officers who are meant to be there to solve their problems themselves create confusion? Most of the Central Excise assessees who are also required to pay Service Tax on goods transport have been paying tax only on 25% of the value in terms of Notification No. 32/2004-Service Tax, Dated : December 3, 2004 and they are right. Now the DG, Service Tax has issued a clarification to all the Chief Commissioners that this exemption is available only if the transport agency pays the tax and not if the consignor or consignee pays it. The learned honourable and totally confused DG does not mention, why he thinks so. The notification does not insist on any such condition. Sadly the DGs understanding of the notification is different, but the moot question is, what is the DGs authority for issuing such a clarification? Of course thankfully his clarification is contained in a letter to the Chief Commissioners who have been asked to share this wisdom with their commissioners. Now the Commissioners or at least their Superintendents will have a lot of explaining to do in the field to convince the assessees that they have to pay tax on the full value and not 25%, because the Honourable DG, Service Tax thinks so. The DG is not the Board and therefore his clarifications are not binding even on the department let alone the assessees. But the field is certainly not going to keep quiet. DDT asked a senior officer who felt that the DGs clarification is patently wrong whether he was going to implement it. Of Course, I am, he said. But Why Sir?, He is not the Board and you are not bound by his clarifications , DDT asked. HE is going to be in the Board soon and that is good enough reason, was the cryptic reply. Before the field goes on the rampage, it is hoped that the CBEC will come with a proper clarification. Some time back the CBEC had issued a direction to the Commissioners not to issue Trade Notices. The Board should come with such a clarification that DGs should not give clarifications -especially on important issues like notifications. This should be the exclusive purview of the Board after all they make these notifications and they know the intention. Further they can obtain the views of the Law Ministry and also amend notifications even with retrospective effect, if necessary. This one small clarification of the DG will result in thousands of Show Cause Notices, if the Board does not come up with an urgent clarification.
Two days later in - 13 04 2005, we wrote,