2012 (7) TMI 108 - AT - Service Tax

GTA - receiver of goods transport services - 75% abatement for the purpose of payment of service tax on Goods Transport Agency service paid by the receiver - Notification No. 32/2004-ST - department has taken a view that abatement cannot be allowed after the issue of Circular by the Board, if the service provider did not make declaration in the consignment note itself, even if he made a separate declaration and the same is available with the service receiver Held that - instructions issued in the Circular by the Board cannot be a mandatory condition when the notification does not have such conditions and such Circular cannot used to deny substantive rights which arise from the notification.

Summary

Issues involved:
Whether abatement of 75% of the value for the purpose of payment of service tax on Goods Transport Agency service is available when a declaration is not made in the consignment notes by the supplier of services.

Analysis:

The appeals before the Appellate Tribunal CESTAT, Ahmedabad involved a common issue even though they were filed against different orders. The respondents in both cases had paid service tax as receivers of goods transport services and claimed abatement of 75% of the value paid for the services provided. The issue arose as the service provider did not make the necessary declaration in the consignment note itself, as required by a Circular issued by the CBEC in 2005. The Tribunal noted that prior to 2005, there was no prescribed procedure to ensure that the transporter had not availed cenvat credit. The Circular issued by the CBEC in 2005 mandated that the service provider had to make a declaration in the consignment note. However, in the cases before the Tribunal, such declarations were not made, leading to the initiation of proceedings questioning the admissibility of the abatement claimed by the respondents.

The adjudicating authority and the Commissioner (Appeals) had taken a view that the abatement claimed by the respondents was admissible based on a general declaration filed by the service provider, even though specific declarations were not made on the consignment notes as required by the Circular. The Revenue filed an appeal arguing that abatement based on a general declaration was incorrect, especially after the Circular clarified that the declaration must be made in the consignment notes themselves. The issue revolved around whether the abatement of 75% under Notification No. 32/2004-ST could be availed when the required declaration was not made in the consignment notes by the service provider.

The Tribunal deliberated on the Circular issued by the Board in 2005, which mandated the declaration in the consignment note for availing the abatement. However, the Tribunal held that since the notification itself did not contain such a condition, the Circular could not be used to deny substantive rights arising from the notification. The Tribunal relied on precedent decisions, including Commissioner of Service Tax, Ahmd. vs. Cadila Pharmaceuticals Limited and Krebs Biochemicals & Inds. Limited vs. CCE, Visakhapatnam, to support its conclusion that the appeals filed by the Revenue lacked merit. Consequently, the Tribunal rejected both appeals and disposed of the cross objection filed by M/s. Tipco Industries Limited.

In conclusion, the Tribunal's decision emphasized that the abatement could not be denied based on the Circular's instructions when the notification itself did not impose such conditions. The judgments cited by the Tribunal supported the view that the Circular could not override the substantive rights granted by the notification, leading to the rejection of the Revenue's appeals.