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Abatement on Transport of Goods by Road

EKALABYA TALUKDAR (SERVICE TAX CONSULTANT) (666 Points)

18 November 2010

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A manufacturing Private Limited Company registered under Central Excise for the manufacturing product and registered under Service Tax for recipient of service "Transport of goods by Road"

The Company honestly deposited the Service Tax for Transport Service at the rate 25% on Service Charge since 2005.

The Service Tax authority issued a "Show Cause Notice" asking the "suppressed material facts with the intention of evading payment" and demanded residue 75% payments from us. As Service Tax Notification No 32/2004 dated 03.12.04 do not supporting the "recipient of service" at the rate 25%.

Should we pay the amount or we will get the protection by laws.

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8 Replies

Gupta Mohit (CA) (824 Points)
Replied 19 November 2010

The demand notice may be in supporting of any other facts because the above said notification is appliable on 25% payment but also some other conditions are given in the notification regarding non availment of cenvat credit etc. so due to the assessment in excise also, may be other conditions get voilated and AO has raised the demand...................

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Raju P Krishnan (CFA) (22 Points)
Replied 29 January 2011

We are facing a similar problem. We are providing two different kinds of services. 1. C&F Agent 2. Transportaion of Goods by Road As per our accountant if we are claiming abatement, then we are not entritled for cenvat credit for input services. The issue is that as a C&F agent we are managing warehouses of our clients where we have to engage the services of Manpower contractors, security guards etc. The service tax paid to these contractors is taken as input credit. The transportation of Goods is another business we are involved in but none of the input credit pertain to this service. Pl clarify regarding the applicability of cenvat credit and abatement. raju krishnan

RAJIW KUMAR SINHA (Chartered Accountant) (109 Points)
Replied 29 January 2011

The Board has clarifide vide F.NO.166/13/2006-CX.4=37B ORDER NO. 5/1/2007-ST, DT-12-03-2007 that abatement of 75% is available to a person liable to pay service tax. In case of recipient of services [as per Rule 2(1)(d) who pays or is liable to pay freight, either himself or through his agent, for transport of goods by road in a goods carriage,has been made liable to pay service tax, instead of service provider, namely, the goods transport agency, abatement of 75% shall also be available to such Recipient of service.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 30 January 2011

receipent of GTA is eligible to avail the benefit of notification 32/2004 for abatement of 75%, subject to condition that the transport operator has not availed the benefit of cenvat credit.

some facts here to understand the facts

1. when GTA avail cenvat credit, he can not avail 32/2004 and have to pay full rate of service tax, also he can not issue invoice without service tax.

2. to take benefit of input credit on capital goods/ inputs, one has to get registered with excise department for service tax / excise, so the transporters who dont have any business identity but ply on roads and works for cash to carry and takes payment of vouchers, cant avail the input credit without any establishment.

3. The transporters who neither mentioned service tax number on their documents nor changed service tax, how they can avail benefit of cenvat credit without getting registered with service tax?

4. When motor vehicles are not eligible for cenvat credit as capital goods unless they are custom made for specific movement of goods, how one can avail cenvat credit on General Motor Vehicle? The rule is made to embark a check on special type vehicles who availed cenvat credit as capital goods, so that they cant offer services without payment of duty/ service tax. not for general assesses.

though for satisfaction of servicetax ppl , make few rubber stamps stating "CENVAT CREDIT ON INPUT SERVICES /CAPITAL GOODS NOT AVAILED" and stamp your transporters documents.

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 02 February 2011

Originally posted by : Raju P Krishnan
	We are facing a similar problem. We are providing two different kinds of services. 1. C&F Agent 2. Transportaion of Goods by Road As per our accountant if we are claiming abatement, then we are not entritled for cenvat credit for input services. The issue is that as a C&F agent we are managing warehouses of our clients where we have to engage the services of Manpower contractors, security guards etc. The service tax paid to these contractors is taken as input credit. The transportation of Goods is another business we are involved in but none of the input credit pertain to this service. Pl clarify regarding the applicability of cenvat credit and abatement. raju krishnan

as you are not providing the GTA services direct to buyer, but u wish to take services from GTA and bill them alongwith yours.

1) if you taker cenvat input credit of GTA then you will loose 1) abatement in your bills 2) threshold limit of 10L exemption.

2) if you pass on the invoice of GTA, direct to client, without taking them in your accounts, then u can not face such probs.

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VAMSI ASSOCIATES/S.PHANI RAJ (Advocate & Tax Consultant) (499 Points)
Replied 12 February 2011

as per the Central board of Customs & Central Excise clarifide vide F.NO.166/13/2006-CX.4=37B ORDER NO. 5/1/2007-ST, DT-12-03-2007 that abatement of 75% is available to a person liable to pay service tax. In case of recipient of services [as per Rule 2(1)(d) who pays or is liable to pay freight, either himself or through his agent, for transport of goods by road in a goods carriage,has been made liable to pay service tax, instead of service provider, namely, the goods transport agency, abatement of 75% shall also be available to such Recipient of service.

the main condition is he is not claiming any input tax credit

that is the main criteria for taking 75 % abatement and paid Service tax on 25 % freight amount @ 10.3 %

ROCKY (ACCOUNTANT) (30 Points)
Replied 28 May 2011

`If tranpoter charged the service tax on 25% of frt amt @ 10.3% ..so can v take the cenvat benefit for the same..`

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 28 May 2011

Originally posted by : ROCKY
	If tranpoter charged the service tax on 25% of frt amt @ 10.3% ..so can v take the cenvat benefit for the same..

yes, input credit can be taken, if transport service qualify for input service in relation to your output

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