Liability of service tax - without availing abatement

[Guest]

One of my client is GTA. He is charging Service tax to his clients who are mostly Sole Prop. concerns. He is not availing any CEnvat Credit. However in a recent inspection, he has been threatened that since has not printed the line that he is not availing the CENVAT credit on the CN's, he is liable to pay service tax on the full amount, and he shall not be eligible for 75% abatement as he is avaling. What is the remedy available?

[Guest]

If the GTA proves non-availment of CENVAT thru his records/books, the authorities cannot deny the abatement for non-printing of the line in the Consignment note as there is no specific requirement insisting this. Further, in view amendment made thru Finance Act, 2008, this 75% abatement has been changed as exemption and no CENVAT is adjustable against GTA liability. Thus, there is no requirement to print this statement in CNs.

[Brijesh Verma]

Dear S K As regards printing such a statement on the invoice is concerned, the issue has got finally settled recently with the enactment of Finance Act 2008. Availability of Cenvat Credit has been taken away from these people. It was only at that time that such a declaration was required on the face of the invoice in order to overcome the obvious practical difficulties as in many case the GTA would be a person not within easy access of the local department and therefore the same fact of non-availment of Cenvat could not have been proved. Therefore in my considered view, now since the very availment of cenvat is stopped from GTA, therefore this requirement is merely a icing in the cake and would not be a guiding scale as far as availability of abatement is concered. Abatement is given by notification 13/2008 (erstwhile 1/2006) which doesnot conatain any such requirement.

[DEV KUMAR KOTHARI]

With reference to yr. query and reply by Mr. Verma and Mr. Ramanujam, I add that at relevant time, printing the fact of not availing CENVAT was at best one of ways to satisfy the existence of such fact. The same can also be established by other means - by sending certificates/ confirmatory letters to the Consignees/ consignors to that effect and also by producing books of accoutn etc. He has to ensure the revenue that his customers have not availed CENVAT on the bais of CN. Off course complications will take place, but for such complications professionals are rewarded.

AI Summary

Cenvat credit restriction: GTAs retain concession eligibility when non availment is demonstrable despite absent consignment declarations. If a GTA proves non availment of CENVAT credit through records, books or confirmations from consignors/consignees, authorities cannot deny abatement solely for lack of a printed declaration; a statutory amendment removed CENVAT availability for GTAs and converted the abatement into an exemption, eliminating the requirement to print the non availment statement on consignment notes.