Abatement for GTA service - availability to consignor/consignee

PJ/Case Laws/2011-12/1368

Case: COMMISSIONER. OF C. EX., PATNA v/s H.T. MEDIA

Citation: 2011 (23) S.T.R. 451 (Pat.)

Issue:- Benefit of abatement - GTA service - Whether consignor or consignee are eligible to take benefit of abatement of 75 percent of service tax on the gross value of taxable service?

Brief Facts:- Respondent-assessee is engaged in the business of production and circulation of newspapers, and its printing activities are carried out in the township of Patna. The newspapers were carried to different destinations by means of road transport, the service providers the assessee being the consignor.

Assessee was liable to payment of service tax on freight charges in view of the provisions of the Finance Act, 1994. As per legal advice to them that they were entitled to abatement of 75 percent of service tax on the gross value of taxable service, Respondent submitted its return and deposited amount equal to 25 percent of the service tax.

The Director General of Service Tax, Mumbai, issued Circular dated 30-3-2005, clarifying the position that the benefit of exemption of abatement of the tax to the extent of 75 percent shall be available to the goods transport agency, the service provider, being the carrier, and not to consignor and consignee. In view of this clarificatory circular, respondent deposited a further sum of Rs. 1,08,153/- on 6-5-2005 and a sum of Rs. 3,442 on 12-5-2005 by way of interest on the delayed deposit.

This was followed by another clarificatory Circular No. B-1/6/05-TRU, dated 27-7-2005, which in substance provided that the benefit of abatement of tax to the extent of 75 percent shall be available to the consignors and consignees also. It was further clarified that a declaration by G.T.A. on the consignment note may suffice. In view of the clarificatory circular dated 27-7-2005, the respondent submitted filed claim for refund of amount of abatement on service tax i.e. 75% deposited by respondent later on. The Adjudicating Officer granted the refund.

The Commissioner of Central Excise suo motu invoked the powers under Section 84 of the Finance Act, 1994 and issued notices to concerned parties as to why the impugned order should not be set aside. The Commissioner set aside the impugned order and directed respondent to deposit the amount of abatement claimed as refund. In appeal, the Tribunal set aside the impugned order and restored the order of Adjudicating Authority.

Hence, Revenue is in appeal before the High Court.

Reasoning of Judgment:- The High Court the benefit of the circular dated 27-7-2005 would be available to the assessee. It was noted that it was evident that confusion was created by the redundant circular dated 30-3-2005, which was rectified by the circular dated 27-7-2005. And the bona fide intentions of the assessee are clearly established. It was noted that after issuance of the circular dated 27-7-2005, the assessee had submitted his application dated 20-10-2005 for refund. Coupled with this is the law-abiding sprit of the assessee that, in view of the circular dated 30-3- 2005 the assessee deposited a sum of Rs. 1,08,153/- on 6-5-2005, and further sum of Rs. 3,442/- on 12-5-2005.

In such a situation, the High Court accepted the submission of the assessee that it was no longer possible for them to obtain the declaration by the G.T.A. on the consignment notes because the same had gone out of the control and possession of the consignor or the G.T.A. long time ago. The assessee was, therefore, left with no other mode and manner of proof to claim the refund. Reliance was placed on the judgment of the Supreme Court in the case of CCE v/s Hari Chand Shri Gopal [2010 (260) ELT 3 SC].

In view of the position that the situation of confusion brought about by the Department, coupled with the bona fides of the assessee, it was extremely difficult for the assessee to obtain declaration by G.T.A. on the consignment note, not being a mandatory condition. They were of the view that the evidence produced by the assessee has rightly been accepted as valid by the Adjudicating Officer. It was observed that the Commissioner erred in setting aside the same on a hyper-technical view of the matter, and erroneously passed the order dated 28-5-2008. The High upheld the order of the Tribunal.

Decision:- Appeal dismissed.

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PJ/Case Laws/2011-12/1368

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