2018 (12) TMI 2018 - AT - Service Tax

Service Tax Abatement Allowed via General Transporter Declarations, Procedural Hurdles Dismissed for Substantive Tax Benefits

Commissioner of Service Tax, Kolkata Versus M/s Hindustan Lever Limited

Tribunal ruled that GTA service tax abatement can be claimed through general declarations on transporter letterheads, not exclusively on consignment ... Entitlement to claim the 75% abatement on the freight amount under the Goods Transport Agency (GTA) services - required declarations were obtained on the letterheads of the transporting agencies rather than on the consignment notes - HELD THAT:- The issue is no longer res-integra. It is observed that this Bench in the case of IOCL vs. Commissioner of Central Excise, Patna [2013 (6) TMI 201 - CESTAT KOLKATA] held that 'the declarations filed by the goods transport agencies (GTA) in their letter-heads or in the respective payment bills certifying that they have not availed Cenvat credit on inputs or capital goods nor availed the benefit of exemption Notification 12/2003-S.T., dated 20-6- 2003 should have been accepted by the department in extending the benefit of Notification No. 32/2003-S.T. and 1/2006-S.T. In view of the above findings, we do not see any merit in the impugned orders passed by the ld. Commissioner.' Conclusion - The assessee is rightly entitled for abatement, since the required declarations have been submitted on the letterheads by the Transporters and that there is no legal requirement to submit the declarations on the consignment notes which is not issued by the transporters in assessee’s case. Even otherwise, the non-submission of declaration on the consignment notes is a procedural lapse and would not result in denial of substantive benefit to the assessee. The impugned order passed by the Ld. Commissioner allowing the abatement is legal and is therefore sustained. The instant appeal filed by the Revenue is rejected. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered by the Tribunal are:(a) Whether the assessee is entitled to claim the prescribed 75% abatement on the freight amount under the Goods Transport Agency (GTA) services, given that the required declarations were obtained on the letterheads of the transporting agencies rather than on the consignment notes.(b) Whether the absence of declarations on consignment notes, as opposed to general declarations on transporter letterheads, disentitles the assessee from claiming the abatement under Notification Nos. 32/2004-ST and 1/2006-ST.(c) Whether the procedural requirement of obtaining declarations on consignment notes is mandatory under the relevant legal provisions or merely a technical formality that cannot defeat substantive benefits.2. ISSUE-WISE DETAILED ANALYSISIssue (a) & (b): Entitlement to 75% abatement based on declarations on letterheads rather than consignment notesRelevant legal framework and precedents: The service tax on Goods Transport Agency services became applicable from 1st January 2005, with the tax liability falling on the service recipient under the reverse charge mechanism. Notifications Nos. 32/2004-ST dated 03.12.2004 and 1/2006-ST dated 01.03.2006 prescribe a 75% abatement on the freight amount, subject to the condition that the transporter has not availed CENVAT credit or benefits under Notification No. 12/2003-ST.The legal provisions do not prescribe any specific format or mode for furnishing the declarations required to claim the abatement. The Department, however, contended that such declarations must be obtained on the consignment notes themselves.Several Tribunal decisions have addressed this issue, notably:IOCL vs. Commissioner of Central Excise, Patna (2013 (29) STR 524 (Tri-Kol))Ganesh Cement Pvt Ltd. vs. Commissioner of Central Excise, Allahabad (2018 (12) GSTL 92 (Tri-All))Paliwal Home Furnishing (cited in IOCL case)Micromatic Grinding Technologies Ltd. (cited in IOCL case)Court's interpretation and reasoning: The Tribunal observed that the Notifications do not specify the format or the document on which the declaration must be made. The insistence by the Revenue on obtaining declarations on each consignment note is based on a Board Circular and departmental clarifications, which do not have the force of law to override the statutory provisions.The Tribunal emphasized that an annual or general declaration on the letterhead of the GTA, certifying non-availment of CENVAT credit and exemption benefits, is sufficient to satisfy the condition for claiming abatement. The rationale is that such a declaration effectively covers all consignments during the relevant period.Key evidence and findings: The assessee had obtained general declarations on the letterheads of the transporting agencies confirming compliance with the conditions for abatement. The transporters did not issue consignment notes to the assessee, making it practically impossible to obtain declarations on such notes.Application of law to facts: Given the absence of any statutory requirement for declarations on consignment notes, and the fact that the transporters provided declarations on their letterheads, the assessee fulfilled the legal conditions for claiming the abatement.Treatment of competing arguments: The Department's argument that declarations must be on consignment notes was rejected as a procedural technicality lacking legal backing. The Tribunal noted that denying substantive benefit on such a ground would be unjust.Conclusions: The assessee is entitled to the 75% abatement on the freight amount under the relevant Notifications despite the absence of declarations on consignment notes, as the general declarations on letterheads suffice.Issue (c): Procedural lapse versus substantive denial of benefitRelevant legal framework and precedents: The principle that procedural irregularities should not defeat substantive rights is well-established. The Tribunal in the cited cases reiterated that technical grounds cannot be used to deny legitimate benefits.Court's interpretation and reasoning: The Tribunal held that the non-submission of declarations on consignment notes is a procedural lapse, not a substantive violation. Since the purpose of the declaration is fulfilled by the general declaration on letterheads, the procedural lapse does not warrant denial of the abatement.Key evidence and findings: The transporters' declarations on letterheads were accepted by the Commissioner in the original order, which was challenged by the Department.Application of law to facts: The procedural lapse did not prejudice the Revenue substantively, as the declarations were in place and verifiable.Treatment of competing arguments: The Department's insistence on strict compliance with the format was dismissed as an unreasonable extension of procedural requirements.Conclusions: The procedural lapse of not obtaining declarations on consignment notes cannot be a ground for denial of abatement.3. SIGNIFICANT HOLDINGSThe Tribunal held:'The Notification No. 32/2004-S.T. and 1/2006-S.T. do not prescribe any format in which the certificate to the effect of non-availment of Cenvat credit on inputs or capital goods and benefit of Notification No. 12/2003, to be furnished. Hence, the certificates given by the GTA on their letterheads has been held to be sufficient and the department cannot insist that such certificate should be on each consignment note.''After appreciating the submissions made by both sides, we find that the notification itself nowhere lays down as to how the said declaration are required to be made. It is only by one Board's Circular and clarifications that the Revenue is insisting on making declaration on each and every consignment. Apart from the fact that this is a technical ground, we also note that the GTA providers having made an annual declaration in respect of the consignment, the fact of the same would be as if such declarations have been made in respect of each and every consignment. As such, Revenue's objection that an annual declaration would not serve the purpose, cannot be appreciated.'Core principles established include:Absence of prescribed format in Notifications means declarations on transporter letterheads are legally sufficient.Procedural technicalities cannot override substantive rights to claim abatement.Board Circulars and departmental instructions cannot impose additional conditions beyond statutory provisions.Final determinations:The assessee is entitled to claim the 75% abatement under the relevant Notifications despite obtaining declarations on letterheads instead of consignment notes.The impugned order passed by the Commissioner allowing the abatement is legal and sustainable.The appeal filed by the Revenue is rejected as devoid of merit.