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To
Respected Sir,
Thank you for granting us personal Hearing we hereby submit our reply to the Show
Cause Notice, here in after referred to as the SCN.
1. The allegations in the SCN are that we are not eligible for the benefit of exemption
from 75% of the taxable value available under notification No.32/2004 dated
3.12.2004 and we wrongly availed the said exemption. Further it is claimed in the
SCN that the said exemption is available only to GTA and not to others who are
liable to pay the service tax under sub-section (2) of sec. 68 of the Finance Act,
1994. Based on the above allegations the SCN demands (Rs. 2034/-) Service Tax of
Rs. 1,992/- and Edu.,cess Rs. 42/- for the period from 01.04.2005 to 30.09.2005,
besides the proposals for imposition of penalty and demand of interest.
2. At the outset we deny the allegations as contrary to the relevant legal provisions and
the directions given by the Central Board of Excise & Customs.
3. It is submitted that the allegation of the availability of the exemption under the
above notification only to the GTA and not to others, is per se contrary to the said
notification itself and the allegation goes contrary to the intention of the legislation.
The notification nowhere restricts the availment of the above benefit only by the
GTA. For availing the benefit of exemption under the above notification, not
specified in the said notification is being imposed in the SCN, which is beyond the
scope of the notification. It is a well-settled law that the department cannot impose a
condition specified in the notification. Therefore, demand made in the SCN is not
sustainable in law.
5. A perusal of the above notification would clearly go to show that it simply exempts
75% of the taxable value with a condition that GTA should not have availed the
concessions specified in the proviso to the said notification. It is not the case of the
department that the GTAs who rendered, taxable services to us have availed the
said concessions making us ineligible to the benefit available under the above
notification.
6. It is not under dispute that as per Sec. 105 (zzp), “taxable service” means any
service provided or to be provided to a customer, by a goods transport agency, in
relation to transport of goods by road in a goods carriage, which means the taxable
event is providing of service and not receiving of service. Only for the purpose of
discharging the tax liability, the person who pays freight has been made liable as
peer the provisions of Sec. 68 (2) of the Finance Act, 1994 read with rule 2 (1) (d)
(v) of Service Tax Rules, 1994.
7. Under the above circumstances, contention of the department that the exemption
under the above notification is available only to GNA is contrary to the legal
provisions itself. When the law itself requires the person who pays the freight to
discharge the tax liability, the notification issued on the valuation of the taxable
service can by no stretch of imagination be kept away from the person who is liable
to pay the service tax. Further, the Government itself has permitted payment of
service tax by the GTA also.
8. It is not under dispute that service tax is an indirect tax and can be passed on to
service receiver. As per the interpretation of the department, if GTA pays the tax
and recovers it from the service receiver, the concession is available and if the
service receiver himself pays the tax, the concession is not available.
Such an interpretation is not advancing g the purpose of the said notification and
instead it curtails the benefit otherwise available. The interpretation advanced in
the SCN is contrary to the intention of legislation.
9. It appears that the stand of the Revenue in the SCN is based on the clarification
given by the Director General of Service Tax vide his letter in F.No.V/DGST/3-
GTO/02/2005/19879 dated 30.03.2005 stating that the benefit of 75% is available
only to GTA and not to the consignee or consignor from one of the seven
categories. The said circular itself is contrary to the legal provisions and the
intention of the legislation. It seems that by realizing the said fact, the above
circular dated 30.03.2005 has been with drawn by the CGST vide letter in
F.No.V/DGST/3-GTO/02/2005 dated 11.04.2005.
10. Further it is submitted that circular in reference no. M.F (D.R.) Letter
No.B1/6/2005-TRUdated 27.07.2005, in para 31, clarified that in cases where
liability for tax payment is on the consignor or the consignee, for availing the
benefit of the 75% exemption from the taxable value, it is sufficient if the GTA
gives a declaration in the consignment note to the effect that they are not availing
the concessions specified in the proviso to notification no. 32/2004-ST. Thus the
above clarification sets at rest the controversy created in the SCN. It is a well settled
law that clarification issued by the CBEC is
Binding on the Central Excise Officers. In support of this contention, the decision
of the Hon’ble Supreme court in the case of commissioner of Customs, Calcutta,
Vs. Indian Oil Corporation Ltd, reported in 2004 (165) E.L.T.257 (SC) is relied on.
11. In view of the above submissions, the demand raised in the SCN is not sustainable
in law.
12. Further it is submitted that when the demand itself is not sustainable in law, the
other proposals for demand of interest, imposition of penalty, etc are also not
sustainable in law.
13. In this connection kind attention is drawn to 37-B Order No.5/1/2007-ST
(F.No.166/13/2006-CX.4 of Ministry of Finance Department of Revenue, Central
Board of Excise and Customs, New Delhi dated 12th March, 2007 which has been
issued in respect of Goods Transport by service provided by a Goods Transport
Agency wherein concession of 75% abatement under notification 32/2004 is
allowed even for service availers of goods transport agency service. In view of the
said Boards order under Section 37b of central Excise Act 1944 which made
applicable to Service Tax, the subject SCN is to dropped. Hence it is proceedings
may please be dropped.
1. The order issued under Section 37B of Central Excise Act, 1944 (Which
section is made applicable to Service Tax provisions under Chapter V of
Finance Act, 1994) clearly says that the service availer who are made
liable to discharge tax liability as one of the seven categories of
consignees or consignors are also eligible to the benefit of Notification
32/2004 provided the conditions of the Notifications are fulfilled.
2. It seems now, that the Department wants to enforce the show cause notice
by taking a stand that the conditions of the Notification No. 32/2004 dated
20.06.2004 are not fulfilled.
6. The Show Cause Notice issued covers a period beyond one year. As per
section 73(1) of Finance act 1994 no demand can be issued beyond a
period of one year except where there is suppression, willful mis-
statement etc with intention to evade tax.
7. The impugned Show Cause Notice alleges that we have failed to furnish
the details regarding availment of exemption and the fulfillment of
eligibility conditions of the Notification No. 32/2004 have mentioned in
the half yearly return ST-3 about the availment of benefit of Notification
No. 32/2004 ST. and there is no mis-statement of facts as alleged in the
said show cause notice and in view of this the demand beyond the
period of one year limitation does not sustain and accordingly penalty
proposed under section 78 of Finance Act 1994 also fails. I request the
Adjudicationg Authority to record his findings on this point of willful mis-
statement also.
8. With out prejudice to the above points of reply we submit to state that
when the adjudicating authority or the Department feels that the assessee
has availed wrongly any notification, it is for the department to
conclusively prove the facts as to how the notice / assessee has wrongly
availed the Notification
In the case under dispute who is the service provider. The transporter
of goods by Road in goods carriage is the provider of service. We
are not the service provider. It is for the department to prove that the
transporter of goods by road in goods carriage has not availed the
above benefits. We request the Adjudicating Authority to record his
findings on this point also.
As required by you, we are furnishing the details of consignment as Annexure 1 and the
copies of consignment notes for your verification.
Thanking You,
Yours Faithfully
ANNEXURE to our Letter Ref. No. AHPPL/GTA-STC/003/06-07 dated 07.10.2008
Dear Sir,
Sub:
We hereby authorize Mr. R. Haresh Kumar (Accounts Manager) to attend the Personal
Hearing. His signature has been attested as below.
Accepted
R. Haresh Kumar
(Accounts Manager)
Signature Attested
P.V. KUTTY
Managing Director
Thanking You,
Yours Faithfully,
For Alpha Helical Pumps Pvt. Ltd.,
Managing Director