Service tax abatement
This query is : Resolved
24 May 2012
Our client has incurred transportation charges & on which Service Tax Liability has been passed to our client.
Can Input credit be taken for the Abatement liability paid by our client?
Can Input credit be taken for the Abatement liability paid by our client?
24 May 2012
Yes you can take credit of service tax paid.
Message likes :
1 times
24 May 2012
Thanks 4 d reply. But as per my boss, the said input is not available. Is there any notification explaining the same. I tried searching the same but could not get any explanation.
24 May 2012
Thanks 4 d reply. But as per my boss, the said input is not available. Is there any notification explaining the same. I tried searching the same but could not get any explanation.
24 July 2025
You're asking a very valid and technical question about CENVAT credit eligibility when abatement has been availed — specifically in the context of transportation charges (likely under Goods Transport Agency (GTA) service).
Let’s break this down clearly and provide notification-based clarity.
✅ Question Recap:
Your client incurred transportation charges.
The service tax liability on those charges has been passed to the client (i.e. reverse charge under GTA service).
Abatement has been availed.
Now the question:
➤ Can your client take CENVAT credit of the service tax paid on abated GTA services?
🔍 Key Legal Position:
🚛 GTA (Goods Transport Agency) – Abatement & CENVAT Credit
Under the Service Tax (Determination of Value) Rules and associated abatement notifications, a 70% abatement was available on GTA services (you paid tax only on 30% of the freight value) — but subject to conditions.
🔖 Notification Reference:
✅ Notification No. 26/2012-ST dated 20.06.2012 (effective from 01.07.2012 onwards)
Prior to that, the relevant one was:
✅ Notification No. 1/2006-ST dated 01.03.2006 (applicable during your query period, i.e. FY 2012)
Condition under the abatement notification:
“The CENVAT credit of inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.”
📌 This means:
If you avail abatement, you are NOT allowed to take input credit on inputs, input services, or capital goods related to that GTA service.
⚠️ Your Specific Case:
If your client:
Paid service tax on 30% of the transportation value after availing 70% abatement, and
Wants to claim CENVAT credit on that service tax paid, then:
❌ Input credit is NOT allowed as per the abatement condition in Notification No. 1/2006-ST (later 26/2012-ST).
📝 Summary Answer:
Particulars Eligibility for CENVAT Credit
Service tax paid under reverse charge (GTA) ✅ Yes — only if no abatement claimed
Service tax paid under reverse charge with abatement ❌ No — not eligible due to condition in abatement notification
📚 Official Reference:
Notification No. 1/2006-ST dated 01.03.2006, Entry No. 6
(Predecessor to Notification No. 26/2012-ST)
"...provided that credit of duty on inputs or capital goods or CENVAT credit on input services, used for providing such taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004."
✅ Conclusion:
Your boss is correct — input credit is not available if abatement under GTA was claimed.
You can only claim CENVAT credit if you pay full service tax without availing abatement.
Let’s break this down clearly and provide notification-based clarity.
✅ Question Recap:
Your client incurred transportation charges.
The service tax liability on those charges has been passed to the client (i.e. reverse charge under GTA service).
Abatement has been availed.
Now the question:
➤ Can your client take CENVAT credit of the service tax paid on abated GTA services?
🔍 Key Legal Position:
🚛 GTA (Goods Transport Agency) – Abatement & CENVAT Credit
Under the Service Tax (Determination of Value) Rules and associated abatement notifications, a 70% abatement was available on GTA services (you paid tax only on 30% of the freight value) — but subject to conditions.
🔖 Notification Reference:
✅ Notification No. 26/2012-ST dated 20.06.2012 (effective from 01.07.2012 onwards)
Prior to that, the relevant one was:
✅ Notification No. 1/2006-ST dated 01.03.2006 (applicable during your query period, i.e. FY 2012)
Condition under the abatement notification:
“The CENVAT credit of inputs, capital goods and input services, used for providing the taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004.”
📌 This means:
If you avail abatement, you are NOT allowed to take input credit on inputs, input services, or capital goods related to that GTA service.
⚠️ Your Specific Case:
If your client:
Paid service tax on 30% of the transportation value after availing 70% abatement, and
Wants to claim CENVAT credit on that service tax paid, then:
❌ Input credit is NOT allowed as per the abatement condition in Notification No. 1/2006-ST (later 26/2012-ST).
📝 Summary Answer:
Particulars Eligibility for CENVAT Credit
Service tax paid under reverse charge (GTA) ✅ Yes — only if no abatement claimed
Service tax paid under reverse charge with abatement ❌ No — not eligible due to condition in abatement notification
📚 Official Reference:
Notification No. 1/2006-ST dated 01.03.2006, Entry No. 6
(Predecessor to Notification No. 26/2012-ST)
"...provided that credit of duty on inputs or capital goods or CENVAT credit on input services, used for providing such taxable service, has not been taken under the provisions of the CENVAT Credit Rules, 2004."
✅ Conclusion:
Your boss is correct — input credit is not available if abatement under GTA was claimed.
You can only claim CENVAT credit if you pay full service tax without availing abatement.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Soyabean hsn code and gst rate
- Treatment of Pension ?annuity returns on PMVY
- ITR filing- non tax audit cases- Asstt.Year 2026-2027
- Long Term Service award taxability in hands of company
- Free lancer income
- AY 26-27 ITR-4 FILING U/S 44-ADA
- Plot of land. Cost of Acquisition
- What is provisional receipt number for generation of form 16A
- Form 27Q Correction statement taking too long to update on IT Portal
- CA IPCC Registeration in 2012, Is my registration Active or Expired
- Showing Gift from relative in ITR for this year
- Gst invoice numbering and delivery challan numbering
- Standard Deduction claim for EPFO Pension and ICICI Prudential Life Annuity
- Small dealers gst returns filing
- Sales amount in Gstr1
- CG after sale of flat
- E Commerce GSTR1 & 3B how to file
- GST Cancellation without jurisdiction
- Legal Opinion on Registrar's Refusal to Investigate a Society for Non-Renewal and Non-Compliance
- GST Refund_RFD-01
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
