25% Service Tax on GTA - DGST’s controversial circular truly withdrawn – confirms Hyderabad Chief Commissioner
The last edition of DDT had carried details of the DGST’s controversial letter and its withdrawal. And how the field refuses to accept the fact that the DG’s letter had indeed been withdrawn! Show Cause Notices are being indiscriminately issued and in some cases prompted by objections raised by the CAG based on the DG’s non existent letter! Imagine the power and range of the DGST. He will not be able to collect a rupee more by his illegal and unwarranted circulars, but he is certainly capable of upsetting normal life for the assessees and making life good for the consultants. It is now more than a year since the DG had withdrawn his letter and surprisingly the issue is still very live. The other day in a seminar at Vizag, this was an agitated issue and all our assurances did not really bring in any cheer as the departmental officers refused to believe that the mighty DG would withdraw his directions. We had supplied copies of the withdrawal letter to several departmental officers so that litigation can be avoided.
In such a situation, the minutes of the RAC meeting in Hyderabad comes as a welcome relief. This was one of the questions in the RAC meeting held on 20th March 2006 under the chairmanship of the Chief Commissioner of Central Excise, Hyderabad as communicated in his C. No. IV/16/51/2006 – CC(HZ) Tech dated 4.4.2006, which a concerned netizen had posted to us.
D. Whether the seven categories of service receivers are eligible for the abatement of 75% as provided to the GTA services? In some divisions Show Cause Notices have been issued to the tax payers denying such abatement to the manufacturers.
And the Chief Commissioner clarified:-
Yes. DGST, letter F.No. V/DGST/43-GTO/02/2005 dated 11.04.2005 may be referred to, withdrawing the clarification given by the DGST vide F.No. V/DGST/43-GTO/02/2005 dated 30.03.2005 that the abatement of 75% from the gross amount charged by Goods Transport Agency for providing taxable service, is available only in cases where Goods Transport Agency is liable to pay Service Tax and the benefit is not available in cases where the provisions of Notification No. 35/2004-ST dated 03.12.2004 are applicable.
Thank you Chief Commissioner! But how can someone refer to the Honourable DG’s letters when they are not made public? At least now all the Chief Commissioners should issue instructions that no Show Cause Notice should be issued on this ground.