Financial Daily from THE HINDU group of publications
Friday, Apr 22, 2005
Financial Daily from THE HINDU group of publications Friday, Apr 22, 2005 |
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Taxation Tax on goods transport agency services — DGST to withdraw controversial letter on scope of abatement K.R. Srivats
New Delhi , April 21 THE ongoing confusion over the scope of 75 per cent abatement for computing service tax on goods transport agency services may soon get resolved. The Mumbai-based Director-General of Service Tax (DGST) has decided to withdraw his controversial letter on the scope of the 75 per cent abatement for goods transport agency services, official sources said. The abatement was being allowed towards fuel, spare parts, toll taxes and local taxes incurred by the transport sector. The Government had, in December 2004, notified the availability of 75 per cent abatement for such services, but with the stipulation that Cenvat credit should not have been availed on inputs or capital goods used for providing such services. The DGST had, on March 30 this year, issued a letter to clarify that the benefit of abatement would not be available in those cases where persons other than the service provider were liable to pay service tax on goods transport agency services. It was held through the DGST letter that abatement of 75 per cent from the gross amount charged by goods transport agency for providing service of transport of goods by road would be available only in cases where the goods transport agency was liable to pay service tax. The DGST letter said the benefit of abatement would not be available in cases where the consignee or consignor was one of the seven specified persons that included a factory; company; society; cooperative society; dealer of excisable goods and partnership firm. Even as there may be some merit in the stance taken by the DGST on the scope of abatement, sources said that it was felt that the abatement benefit could not be denied in cases where persons other than the service provider were liable to pay service tax.
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