GTA - Exemption for availing cenvat credit

[Asked by Guest]

Under GTA category, if the liabilty to deposit tax is of consignee or consigner whether the provisions of exemptions of service tax on 75% of freight amount is not avilable? we have received show cause notice from service tax department which says that such benefit, of levy of service tax on 25% of freight amount, is not avilable if the payment of service tax is made by consignee/consignor and not by transport agency.

[Surender Gupta]

The benefit of 75% abatement is available to the consingnee or consignor. For more details you may read the article posted on this site dated 3-11-2006 concerning this issue.

[Vijay Chitte]

You can agrue that 75% abatemenet is also available in your case. This was one of the questions in th RAC meeting held on 20th March 2006 under the chairmanship of the Chief commissioner of Cemtral Excise, Hydrabad as communicated in his C. No. IV/16/51/2006 - CC(HZ) Tech dated 4-4-2006. Question raised: WHETHER THE SEVEN CATEGORIES OF SERVICE RECEIVERS ARE ELIGIBLE FOR THE ABATEMENT OF 75% AS PROVIDED TO THE GTA SERVICES? The answer is Yes. DGST letter F.No. V/DGST/43-GTO/02/2005 dated 11-04-2005 my be reffered to, withdrawing the clarification given by the DGST vide F.No. V/DGST/43-GTO/02/2005 dated 30-03-2005 that the abatement of 75% from the gross amount charged by Goods Transport Agency for providing taxable service, is available only in cases where Goods Transport Agency is liable to pay Service tax and the benefit is not availble in cases where the provisions of Notification No. 35/2004-ST dated 03-12-2004 are applicable. Vijay Chitte - Claris

[Madhukar N Hiregange]

The demand made by the department is infructuos and illegal. I think there may also be a ciruclar clarifying this position in this year.Deduction of 75% is very much available provdied that a declarationis obtianed from the GTA that he has not availed the cnevta credit on capiotal goods and inputs and that he has not opted for deduction under not.12.2003

AI Summary

GTA abatement available to consignor or consignee even if they discharge tax, subject to non availment of cenvat.
The abatement for Goods Transport Agency services is available to consignor or consignee even when they discharge the service tax, provided the transport provider has not availed cenvat credit on capital goods and inputs and furnishes a declaration of non availment and non option for other deductions.