Exemption under service tax law cannot be denied on a circular-based procedural condition absent breach of notification terms.

Notification No. 32/2004-ST granted 75% abatement for goods transport agency services subject to substantive conditions that the GTA must not avail Cenvat credit on inputs or capital goods and must not take benefit of Notification No. 12/2003-ST. The CESTAT held that denial of the exemption could not rest on a procedural requirement introduced by a circular, since the notification itself did not require a declaration on each consignment note. It also found no proof that the GTA had actually breached the substantive conditions, and accepted the declaration furnished on the GTA's letterhead. The denial of exemption was therefore unsustainable and the appeal was allowed with consequential relief.

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Issues: Whether the denial of 75% abatement under Notification No. 32/2004-ST was justified solely because the declaration sought by the department was not obtained on each consignment note, and whether the exemption could be denied in the absence of proof that the goods transport agency had availed Cenvat credit or the benefit of Notification No. 12/2003-ST.

Analysis: The exemption notification prescribed substantive conditions, namely that the goods transport agency should not avail Cenvat credit on inputs or capital goods and should not avail the benefit of Notification No. 12/2003-ST. The notification did not itself require a declaration on the consignment note, and a circular could not add a condition or procedure not contained in the notification. The appellant, as recipient of service discharging tax under reverse charge, could not practically enforce a condition upon the transport agency beyond what the notification required. The department also failed to prove any actual violation of the substantive conditions, and the declaration furnished by the transport agency on its letterhead could not be discarded merely because it was not endorsed on each consignment note.

Conclusion: The denial of exemption was unsustainable and the benefit of Notification No. 32/2004-ST could not be refused on the procedural objection raised by the department.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: An exemption notification cannot be denied on the basis of a procedural requirement introduced by a circular when the notification itself does not prescribe that condition, and substantive exemption cannot be refused absent proof of breach of the notification's conditions.

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