Service Tax on Goods transport – DGST confirms withdrawal of controversial letter.
It is more than a year since we broke the story of the DGST’s controversial letter not to allow abatement to manufacturers paying Service Tax on goods transport. Even after we confirmed several times that the DGST had withdrawn his circular, the field officers were not prepared to accept the withdrawal and thousands of Show Cause Notices have been issued all over the country. While the Chief Commissioners were prompt in circulating the DGST’s first missive, they ignored his second letter withdrawing the first one.
Now finally the DGST has clarified that he has indeed withdrawn the letter. In his letter F.NO.V/DGST/43-GTO/02/2005/2745, dated 3rd April, 2006, (a copy of which is available with TIOL), Mr. Sanjay Pant, Additional Director, DGST informed the Chief Commissioners that the letter has indeed been withdrawn. The text of his letter is reproduced here.
Sub:- Applicability of Notification No.32/2004-SERVICE TAX dated Vis-a-Vis Notification No.35/2004-ST dated 03.12.2004-Objection raised by CERA on the issue-
Several references are received on the above issue. This Directorate had issued a clarification vide letter of even No. dated 30.3.2005, that the benefit of Notification No.32/2004-ST dated 03.12.2004 is not available in cases where the provision of Notification No.35/2004-ST dated 03.12.2004 are applicable. However said letter dated 30.03.2004 of this office had been withdrawn by this Directorate vide letter of even No. dated 11.04.2005 (copy enclosed.)
This is for kind information again.
Yours faithfully,
(SANJAY PANT)
ADDITIONAL DIRECTOR
Encl: As above
Just look at the amount of damage that one man could cause by his irresponsible letter. Even after a whole year the issue is refusing to die and is taking new dimensions. Now the CAG has picked up the point and because of their objection, at least 15,000 Show Cause Notices are floating around. This one letter of the DGST must have cost the nation at least 30 Crores rupees with which we could have bought 60 Crores kgs of rice, enough to feed all Indians for a day. The letter had eaten up one day’s food of the whole nation.
The Board which spends so much money on advertising the need to pay Service Tax should advertise the fact that the DGST’s letter does not exist and that abatement is available to all and should immediately order withdrawal of all Show Cause Notices issued consequent to the mischievous letter and the subsequent audit objection..