2018 (8) TMI 735 - AT - Service Tax

Benefit of abatement - GTA Services - reverse charge mechanism - Revenue entertained a view that inasmuch as the GTA service provider has not endorsed the consignment notes to the effect that such credit has not been available by them the appellant is not entitled to the abatement of 75% - Held that - An identical matter was the subject matter of the Hon ble Gujrat High Court in the case of Commissioner of Service Tax Ahmedabad V/s Cadila Pharmaceuticals Ltd. 2013 (1) TMI 353 - GUJARAT HIGH COURT where it was held that Such procedure prescribed by the Board cannot be said to be mandatory and the same cannot be adopted for denying substantive right especially when it is not the case of the Revenue that credit has been availed by the transporter. In the present case also it is not the Revenue s stand that the conditions of the notification does not stand fulfilled otherwise. Nowhere it stands contented by the Revenue that the transporter have availed the credit. Appeal allowed - decided in favor of appellant.

Summary

Issues:

1. Availability of abatement on GTA services under Notification No.01/2006-ST.
2. Requirement of endorsement on consignment notes for availing abatement.
3. Dispute regarding the fulfillment of conditions of the notification.
4. Interpretation of the mandatory nature of consignment note endorsement.
5. Comparison with the decision of the Hon'ble Gujarat High Court.

Analysis:

The judgment by the Appellate Tribunal CESTAT ALLAHABAD dealt with the issue of availing abatement on Goods Transport Agency (GTA) services under Notification No.01/2006-ST. The appellants, registered under Service Tax and Central Excise, had paid service tax on GTA services on a reverse charge basis with a 75% abatement. The dispute arose when the Revenue contended that the appellants were not entitled to the abatement as the consignment notes were not endorsed by the GTA service provider, indicating non-availment of Cenvat credit on inputs or capital goods. Proceedings were initiated against the appellants, leading to the imposition of a demand and penalty upheld by the Commissioner (Appeals).

During adjudication, the appellants clarified that the transporters used were not registered with the Service Tax Department, hence the question of availing Cenvat credit did not arise. The Revenue's sole reason for denial was the lack of endorsement on consignment notes. The Tribunal referred to a similar case before the Hon'ble Gujarat High Court, where it was held that the procedure of endorsing consignment notes, prescribed by the CBEC, was not mandatory and could not be a basis for denying substantive rights, especially when there was no evidence of credit availed by the transporter.

The Tribunal noted that the Revenue did not dispute the non-registration of transporters with the Service Tax Department. It emphasized that the conditions of the notification were fulfilled, and the benefit could not be denied solely on the grounds of missing consignment note endorsements. The Tribunal relied on the Gujarat High Court decision to conclude that the endorsement procedure was not part of the notification and could not be used to reject the abatement claim. As the issue was similar to the Gujarat High Court case, the Tribunal found no merit in the impugned order, setting it aside and allowing the appeal with consequential relief to the appellant.