Whether abatement not available to service recipient

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Manoj Agarwal (Querist)
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14 April 2013 The benefit of Abatement is available on various taxable services vide Notification No. 26/2012, which inter alia, reads as follow:
"hereby exempts the taxable service of the
description specified in column (2) of the Table below, from so much of the service tax leviable thereon U/s 66B of the said Act, as is in excess of the service tax calculated on a value which is equivalent to a percentage specified in the corresponding entry in column (3) of the said Table, of the amount charged by SUCH
SERVICE PROVIDER for providing the said taxable service, unless specified otherwise, subject to the relevant
conditions specified in the corresponding entry in column (4) of the said Table"

In view of the expression 'Such Service Provider' it appears that the benefit is applicable only to service provider and therefore a service receiver liable to pay tax under reverse charge is not entitled to claim abatement.

Kindly clarify.

CA Vikas Acharya

CA Vikas Acharya (Expert)
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14 April 2013 Sir , If we clearly read the notification language it says the govt. exempts the taxable service of given description and not the provider of taxable service. Also the point on which you throwing the light indicates that exemption value will be on the AMOUNT charged by such service provider for providing the taxable service, this is simply to clarify on which amount the exemption will be calculated and here the word provider is used because in all the cases the person charging the value for service will be service provider, however the person paying the tax may be service recipient.

Now coming to the point whether the receiver can have the abatement. In answer to this query, CBEC in its EDUCATION GUIDE of service tax under point 10.1.6 has mentioned the few lines , which will help you understand the intention of law. the last sentence of the said point says:
'However since the liability of the service provider and service recipient are different and independent of each other, the service recipient can independently avail or forgo an abatement or choose a valuation option depending upon the ease, data available and economics'.
Hope its clear from the above sentence.

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