The Assistant Commissioner, May 11, 2006

Service Tax Division – III

9, Old Post Office Street, 4th Floor,
Kolkata – 700 001

Dear Sir,

Re: Show Cause cum Demand notice no. V(15) 237 / Adjn / ST / DIII /Kol /06 dated
20.4.06

Please refer to your abovementioned show cause cum demand notice wherein it has been
alleged that we have wrongly availed 75% abatement on the gross amount charged by the
G.T.A. as per notification no. 32/2004 – ST dated 03.12.04 which is not allowable to us
by virtue of notification no. 35/2004 – ST dated 03.12.04 during the period from January
05 to March 05 resulting in short payment of service tax amounting to Rs. 1,37,209/-
including education cess. It has been further stated by you that that there is nothing on
record to show that we have fulfilled the mandatory condition by proviso (i) and (ii) of
Notification No. 32/2004 – ST while availing the above benefits.
In this regard we dispute your demand of 1,37,209/- as service tax in addition to the
interest under section 75 and penalty under section 76 of the Finance Act, 1994 on the
following grounds:-
(i) It has been stated by you that benefit of 75% abatement is not allowable to us
by virtue of notification no. 35/2004 – ST dated 03.12.04. However nothing
has been stated in the notification no. 35/2004 – ST dated 03.12.04 regarding
denial of benefit of 75% abatement. Notification No. 35/2004-ST, dated 3rd
December, 2004 has been issued for the purpose of prescribing liability of the
person for payment of tax and documents to be executed by the Goods
Transportation Agency. This notification prescribes that the person making
payment towards freight would be liable to pay the service tax, in case the
consignor or consignee of the goods transported is any one of the seven
entities as stated in the notification. Further this notification states that any
goods transport agency which provides service in relation to transport of
goods by road in a goods carriage shall issue a consignment note to the
customer. However nothing has been stated in this notification regarding
denial or otherwise of abatement benefit.
(ii) Further circular no. F.No.B1/ 6 /2005-TRU dated 27/7/05 was issued by
Government of India, Ministry of Finance, Department of Revenue (Tax
Research Unit), to clarify the issue of benefit of 75% abatement to consignor
or consignee. It was stated in the para 31.1 of the circular that an abatement of
75% in taxable service of goods transport by road is available on the condition
that the goods transport agency has not availed credit on inputs and capital
goods used for providing taxable service and has also not availed benefit of
notification No. 12/2003-Service Tax dated 20.6.2003 (vide Notification No.
32/2004-Service Tax, dated 3.12.2004). Further the procedure as to how it
should be confirmed by such consignor or consignee that the goods transport
 agency has not availed credit or benefit of notification No. 12/2003-Service
Tax, where liability for tax payment is on the consignor or consignee, was
prescribed in the circular. In such cases it was clarified that a declaration by
the goods transport agency to the effect that neither credit on inputs or capital
goods used for provision of service has been taken nor the benefit of
notification No. 12/2003-Service Tax has been taken by them may suffice for
the purpose of availment of abatement by the person liable to pay service tax.
(iii) Regarding your allegation that there is nothing on record to show that we
have fulfilled the mandatory condition by proviso (i) and (ii) of Notification
No. 32/2004 – ST while availing the above benefits, we wish to clarify that we
have maintained all the records fulfilling the mandatory condition by proviso
(i) and (ii) of Notification No. 32/2004 – ST, as we have obtained declaration
from all our Goods Transport Operators to the effect that that neither credit on
inputs or capital goods used for provision of service has been taken nor the
benefit of notification No. 12/2003-Service Tax has been taken by them.
We hope that our clarifications above will satisfy your goodself and you will be kind
enough to drop all proceedings in respect of the above show cause notice.

We would like to be heard in person before the case is adjudicated.

Thanking you,

Yours faithfully,

For Birla Tyres

(Authorised Signatory)