Personal Hearing – Written Representation To Central Excise

Personal Hearing – Written representation to Central Excise

To OFFICE OF THE ASST COMMISIONER. OF CENTRAL EXCISE, COIMBATORE-IV DIVISION, 1237, ELGI BUILDING, 1 FLOOR, TRICHY ROAD, COIMBATORE – 18. Ref. No. AHPPL/GTA-STC/003/06-07 07.10.2008 Respected Sir, Sub: Personal Hearing – Written representation. Ref: Your Show Case Notice No. C.No.IV/16/201/2006 ST

Dt.23.08.2007

Thank you for granting us personal Hearing we hereby submit our reply to the Show Cause Notice, here in after referred to as the SCN. 1. The allegations in the SCN are that we are not eligible for the benefit of exemption from 75% of the taxable value available under notification No.32/2004 dated 3.12.2004 and we wrongly availed the said exemption. Further it is claimed in the SCN that the said exemption is available only to GTA and not to others who are liable to pay the service tax under sub-section (2) of sec. 68 of the Finance Act, 1994. Based on the above allegations the SCN demands (Rs. 2034/-) Service Tax of Rs. 1,992/- and Edu.,cess Rs. 42/- for the period from 01.04.2005 to 30.09.2005, besides the proposals for imposition of penalty and demand of interest. 2. At the outset we deny the allegations as contrary to the relevant legal provisions and the directions given by the Central Board of Excise & Customs.

3. It is submitted that the allegation of the availability of the exemption under the above notification only to the GTA and not to others, is per se contrary to the said notification itself and the allegation goes contrary to the intention of the legislation. The notification nowhere restricts the availment of the above benefit only by the GTA. For availing the benefit of exemption under the above notification, not specified in the said notification is being imposed in the SCN, which is beyond the scope of the notification. It is a well-settled law that the department cannot impose a condition specified in the notification. Therefore, demand made in the SCN is not sustainable in law. 4. For the sake of convenience notification No. 32/2004-S.T., dated 3-12-2004 is reproduced hereunder:Service tax payable on 25% of the gross amount charged by Goods Transport Agency (w.e.f. 1-1-2005) In exercise of the [powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided by a goods transport agency to a customer, in relation to the transport of goods by road in a goods carriage, from so much of the service tax leviable thereon under section 66 of the said Act, as is in excess of the service tax calculated on a value which is equivalent to twenty five percent, of the gross amount charged from the customer by such goods transport agency for providing the said taxable service: Provided that this exemption shall not apply in such cases where – (i)

The credit of duty paid on inputs or capital goods used for providing such taxable service has been taken under the provisions of the Cenvat Credit Rules, 2004; or

(ii)

The goods transport agency has availed the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue)

No. 12/2003-Service Tax, dated the 20th June, 2003 [G.S.R. 503(E), dated the 20th June, 2003]. 5. A perusal of the above notification would clearly go to show that it simply exempts 75% of the taxable value with a condition that GTA should not have availed the concessions specified in the proviso to the said notification. It is not the case of the department that the GTAs who rendered, taxable services to us have availed the said concessions making us ineligible to the benefit available under the above notification. 6. It is not under dispute that as per Sec. 105 (zzp), “taxable service” means any service provided or to be provided to a customer, by a goods transport agency, in relation to transport of goods by road in a goods carriage, which means the taxable event is providing of service and not receiving of service. Only for the purpose of discharging the tax liability, the person who pays freight has been made liable as peer the provisions of Sec. 68 (2) of the Finance Act, 1994 read with rule 2 (1) (d) (v) of Service Tax Rules, 1994. 7. Under the above circumstances, contention of the department that the exemption under the above notification is available only to GNA is contrary to the legal provisions itself. When the law itself requires the person who pays the freight to discharge the tax liability, the notification issued on the valuation of the taxable service can by no stretch of imagination be kept away from the person who is liable to pay the service tax. Further, the Government itself has permitted payment of service tax by the GTA also. 8. It is not under dispute that service tax is an indirect tax and can be passed on to service receiver. As per the interpretation of the department, if GTA pays the tax and recovers it from the service receiver, the concession is available and if the service receiver himself pays the tax, the concession is not available.

Such an interpretation is not advancing g the purpose of the said notification and instead it curtails the benefit otherwise available. The interpretation advanced in the SCN is contrary to the intention of legislation. 9. It appears that the stand of the Revenue in the SCN is based on the clarification given by the Director General of Service Tax vide his letter in F.No.V/DGST/3GTO/02/2005/19879 dated 30.03.2005 stating that the benefit of 75% is available only to GTA and not to the consignee or consignor from one of the seven categories. The said circular itself is contrary to the legal provisions and the intention of the legislation. It seems that by realizing the said fact, the above circular dated 30.03.2005 has been with drawn by the CGST vide letter in F.No.V/DGST/3-GTO/02/2005 dated 11.04.2005. 10. Further it is submitted that circular in reference no. M.F (D.R.) Letter No.B1/6/2005-TRUdated 27.07.2005, in para 31, clarified that in cases where liability for tax payment is on the consignor or the consignee, for availing the benefit of the 75% exemption from the taxable value, it is sufficient if the GTA gives a declaration in the consignment note to the effect that they are not availing the concessions specified in the proviso to notification no. 32/2004-ST. Thus the above clarification sets at rest the controversy created in the SCN. It is a well settled law that clarification issued by the CBEC is Binding on the Central Excise Officers. In support of this contention, the decision of the Hon’ble Supreme court in the case of commissioner of Customs, Calcutta, Vs. Indian Oil Corporation Ltd, reported in 2004 (165) E.L.T.257 (SC) is relied on. 11. In view of the above submissions, the demand raised in the SCN is not sustainable in law. 12. Further it is submitted that when the demand itself is not sustainable in law, the other proposals for demand of interest, imposition of penalty, etc are also not sustainable in law.

13. In this connection kind attention is drawn to 37-B Order No.5/1/2007-ST (F.No.166/13/2006-CX.4 of Ministry of Finance Department of Revenue, Central Board of Excise and Customs, New Delhi dated 12th March, 2007 which has been issued in respect of Goods Transport by service provided by a Goods Transport Agency wherein concession of 75% abatement under notification 32/2004 is allowed even for service availers of goods transport agency service. In view of the said Boards order under Section 37b of central Excise Act 1944 which made applicable to Service Tax, the subject SCN is to dropped. Hence it is proceedings may please be dropped. We have also submitted the following for your consideration. 1. The order issued under Section 37B of Central Excise Act, 1944 (Which section is made applicable to Service Tax provisions under Chapter V of Finance Act, 1994) clearly says that the service availer who are made liable to discharge tax liability as one of the seven categories of consignees or consignors are also eligible to the benefit of Notification 32/2004 provided the conditions of the Notifications are fulfilled. 2. It seems now, that the Department wants to enforce the show cause notice by taking a stand that the conditions of the Notification No. 32/2004 dated 20.06.2004 are not fulfilled. 3. It is a well settled principle of law that no authority is empowered to traverse beyond the scope of Show Cause Notice. The Adjudicating authority can confirm the demand made in the Show Cause Notice only if the grounds of the Show Cause Notice are proved. Show Cause Notice cannot be confirmed based on the ground which is not alleged in the Show Cause Notice. There is no allegation in the Show Cause Notice that the benefits of the Notification No.32/2004 dated 20.06.2004 has not been

fulfilled. The only allegation in the subject Show Cause Notice is that the exemption under Notification no. 32/2004 dated 20.06.2004 is available only to the Goods Transport Agency and not to any other person. 4. So there is no allegation about the non-fulfillment of the conditions of the Notification No.32/2004 dated 20.06.2004. Incase the Adjudicating authority decides to deny the benefit of the Notification No. 32/2004 dated 20.06.2004. We request the Adjudicating authority to record his findings with regard to our claim that there is no allegation in the Show Cause Notice about non-fulfillment of the conditions of the Notification No. 32/2004 dated 20.06.2004 in his adjudication order so that we could be able to try get justice in our case at least with the Appellate Authority. We hope the Adjudicating authority would give a speaking order on this point. 5. With out prejudice to the above we submit that the following consignment notes satisfy the procedure prescribed in the order of the central Board of Excise and Customs, New Delhi cited above. Hence we have fulfilled the conditions of the Notification No. 32/2004 dated 20.06.2004. 6. The Show Cause Notice issued covers a period beyond one year. As per section 73(1) of Finance act 1994 no demand can be issued beyond a period of one year except where there is suppression, willful misstatement etc with intention to evade tax. 7. The impugned Show Cause Notice alleges that we have failed to furnish the details regarding availment of exemption and the fulfillment of eligibility conditions of the Notification No. 32/2004 have mentioned in the half yearly return ST-3 about the availment of benefit of Notification No. 32/2004 ST. and there is no mis-statement of facts as alleged in the said show cause notice and in view of this the demand beyond the

period of one year limitation does not sustain and accordingly penalty proposed under section 78 of Finance Act 1994 also fails. I request the Adjudicationg Authority to record his findings on this point of willful misstatement also. 8. With out prejudice to the above points of reply we submit to state that when the adjudicating authority or the Department feels that the assessee has availed wrongly any notification, it is for the department to conclusively prove the facts as to how the notice / assessee has wrongly availed the Notification 9. Assuming but not accepting that there is an allegation in the Show Cause Notice that the conditions of the Notification No. 32/2004 dated 20.06.2007, has not been fulfilled then the department should prove positively that the conditions have not been fulfilled. 10. What are the conditions of the said Notification (a) Credit of duty paid on inputs or capital goods should not be availed by the service provider (b) Benefit of Notification No. 23/2003 should be availed by the service provider. In the case under dispute who is the service provider. The transporter of goods by Road in goods carriage is the provider of service. We are not the service provider. It is for the department to prove that the transporter of goods by road in goods carriage has not availed the above benefits. We request the Adjudicating Authority to record his findings on this point also.

As required by you, we are furnishing the details of consignment as Annexure 1 and the copies of consignment notes for your verification.

Thanking You, Yours Faithfully

ANNEXURE to our Letter Ref. No. AHPPL/GTA-STC/003/06-07 dated 07.10.2008 Sl. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.

Transporter Name Transport Corporation of India Govindaraj Lorry Service (Regd.) Vijay Anand Roadlines Ltd. Inland Road Transport Transport Corporation of India Govindaraj Lorry Service (Regd.) Transport Corporation of India Gatge Patil Transports Ltd. Transport Corporation of India V-Trans (India) Ltd. Transport Corporation of India Inland Road Transport Transport Corporation of India Vijay Anand Roadlines Ltd.

Consignment Note / Date 550719234 / 19.04.2005 79945 / 22.06.2005 29009435 / 28.06.2005 336238 / 30.06.2005 550719186 / 11.07.2005 83604 / 04.08.2005 550719783 / 06.08.2005 650911 / 06.08.2005 550865022 / 12.08.2005 5656124 / 19.08.2005 55865420 / 26.08.2005 336695 / 31.08.2005 550907114 / 17.09.2005 69003290 / 10.09.2005

Vehicle No.

Freight Paid

TN 38 D 8055

915.00

TN 38 D 8055

600.00

TN 38 D 8055

330.00

TN 38 D 8055

2155.00

TN 38 D 8055

2040.00

TN 38 D 8055

450.00

TN 38 D 8055

2140.00

TN 38 D 8055

2387.00

TN 38 D 8055

2160.00

TN 38 D 8055

1110.00

TN 38 D 8055

245.00

TN 38 D 8055

4045.00

TN 38 D 8055

7500.00

TN 38 D 8055

480.00

TOTAL

26557.00

OFFICE OF THE ASST COMMISIONER. OF CENTRAL EXCISE, COIMBATORE-IV DIVISION, 1237, ELGI BUILDING, 1 FLOOR, TRICHY ROAD, COIMBATORE – 18. Ref. No. AHPPL/GTA-STC/004/06-07 07.10.2008 Dear Sir, Sub: We hereby authorize Mr. R. Haresh Kumar (Accounts Manager) to attend the Personal Hearing. His signature has been attested as below.

Accepted R. Haresh Kumar (Accounts Manager)

Signature Attested P.V. KUTTY Managing Director Thanking You, Yours Faithfully, For Alpha Helical Pumps Pvt. Ltd.,

Managing Director