The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has that mere transportation of goods by road, without issuance of a consignment note and without rendering services in relation to such transport, does not constitute taxable service by a goods transport agency. For classification as a GTA under the Finance Act, issuance of a consignment note is essential, and where the transporter merely carries goods for freight and does not perform the composite or ancillary elements associated with GTA service, the activity remains covered by the negative list under Section 66D(p).
Accordingly, actual transport of goods by road by such an operator is not liable to service tax. The Tribunal therefore held that the adjudicating authority had wrongly confirmed the demand by treating the appellant’s activity as taxable GTA service.
The Division Bench comprising Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) identified the central issue as whether the appellant was a taxable goods transport agency or was merely transporting goods by road in an activity covered by the negative list. It examined Section 66D(p), Section 65(50b), Section 65(105)(zzp), and Rule 4B of the Service Tax Rules, 2004, and observed that a person can be treated as a goods transport agency only if two conditions are fulfilled: it provides service in relation to transport of goods by road, and it issues a consignment note by whatever name called.
The Tribunal further noted that the appellant was not registered under the Carriage by Road Act, 2007, did not issue consignment notes, charged mere freight, and did not provide ancillary or intermediary services such as loading or unloading; the materials on record instead showed that loading, documentation and other related functions were handled by Safexpress or the recipient. On that basis, the Tribunal found no evidence from the department to establish that the appellant had rendered taxable GTA services rather than mere transport of goods by road.
Briefly, the appellant was proceeded against on the basis of TDS data for FY 2014–15 reflecting receipts of Rs. 16,90,38,430 under Sections 194C, 194H, 194I and 194J of the Income Tax Act, and the department alleged that these receipts represented taxable services on which service tax of Rs. 2,08,93,150 had not been discharged. A show cause notice was issued proposing recovery of service tax with interest and penalties, and the demand was confirmed by the Order-in-Original.
On appeal, the appellant contended that it was engaged only in mere transportation of goods by road and was a goods transport operator, not a goods transport agency, because it did not issue consignment notes and its activity fell within the negative list under Section 66D(p) of the Finance Act, 1994.
