The Assistant Commissioner, May 30, 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(5) 91 / ST-Adjn / JC /06/3569 dated
09.05.06

Please refer to your abovementioned show cause cum demand notice wherein it has been
alleged that we have wrongly availed benefit of notification no. 32/2004 – ST dated
03.12.04 and consequently wrongly availed benefit of 75% abatement on the gross
amount charged by the G.T.A. during the period from April 05 to September 05 resulting
in short payment of service tax amounting to Rs. 5,61,380/- including education cess. It
has been further stated by you that that we have not submitted any evidence 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 5,61,380/- as service tax including education
cess 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 to the consignor
or consignee 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). It
was further prescribed in the circular 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 we have not submitted any evidence 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. However nothing has been prescribed in the notification
32/2004 that we are required to submit the evidence for availing the benefit of
75% abatement.
Hence we request you to kindly drop the aforesaid proceedings.

We further request you give us an opportunity in person to be heard before the case is
adjudicated.

Thanking you,

Yours faithfully,

For Birla Tyres

(Authorised Signatory)