Service tax on GTA – Ghost of abatement availability rears its head again only to be exorcised by the Board
We are reminded of a small anecdote. A pensioner goes to the Bank to draw pension for March 2008 and April 2008. He could produce a certificate that he was alive only for April 2008. Bank denies him pension for the Month of March 2008 as he failed to prove that he was alive during March 2008. Sounds ridiculous? Please read on…
The tryst with Service tax on GTA is seemingly endless. In DDT 571 we reported that the Board has finally set to rest the confusion on the availability of abatement of 25% under Notification No. 32/2004-ST and 1/2006-ST by issuing a Section 37B Order. Inspite of a Section 37B Order from the CBEC, the field formations have one reason or the other to protract the litigations on this jinxed issue.
In Circular No. 5/1/2007-ST dated 12.03.2007 it was clarified that any person who is made liable to pay service tax, while discharging service tax liability on such service, is entitled to avail of the benefit of exemption in terms of notifications No 32/2004-ST, and No. 1/2006-ST, subject to fulfilment of the conditions prescribed therein by adopting the procedure prescribed vide para-31 of circular No.B1/6/2005-TRU, dated 27.7.2005. The field formations were directed to resolve the pending cases accordingly. We all hoped that the matter was finally given a decent burial and rejoiced. But it was not the case as expected. The persistent field formations had other ideas.
It may be recalled that in terms of Notification Nos. 32/2004-ST, there are two conditions prescribed for availing the said abatement. One is non-availment of CENVAT credit and second is the non-availment of benefit of notification no. 12/2003-ST.
In Para 31 of circular No. B1/6/2005-TRU dated 27.07.2005, it was clarified by the Board that if the service recipient obtains a declaration from the GTA who issued the consignment note, that neither credit on input or capital goods used for the provision of service has been taken nor the benefit of notification No. 12/2003-ST has been availed by them would suffice for the purpose of availment of abatement by such service recipient i.e. the person liable to pay service tax.
However, the Notification No. 32/2004-ST is effective from January 1, 2005 and the TRU Circular is dated 27.07.2005. Obviously, in the intervening period, there is a gap of seven months and in the absence of a clear cut clarification, the show cause notices issued to cover this period were hanging fire in the field formations.
To clear the air on this aspect, the Board had to intervene once again to clarify that the benefit of availment of abatement may also be extended to past cases i.e. for the period between January 2005 and July 2005, if the taxpayers produce a general declaration from the GTA to the effect that neither credit on input or capital goods used for the provision of service has been taken nor the benefit of notification No. 12/2003-ST has been availed by them.
Let us all hope that this ghost of GTA abatement is exorcised forever as Board has now clarified that if a pensioner was alive during April 2008, it means he was also alive during March 2008.
CBEC Letter No .F.NO.137/154/2008-CX.4 Dated: August 21, 2008