In Absence Of Consignment Note Transport Services Can't Be Considered As GTA Services: CESTAT

The Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that in the absence of a consignment note, transport services cannot be considered goods transport agency (GTA) services.

The bench of Binu Tamta (Judicial Member) has held that the goods were transported locally from the mines to the factory site, and since the distance to be covered is short, no consignment note has been issued by the service provider. Therefore, the levy of service tax under the category of goods transport agency is not sustainable.

The appellant is a receiver of services under the category of “Goods Transport Agency” (GTA) and registered under Service Tax. In the course of the audit conducted by the officers of Central Excise, Jaipur, it was observed that the assessee had been a recipient of services falling under the category of GTA and paying the service tax as per the provisions of Rule 2(1)(d)(v) of the Service Tax Rules, 1994. However, the assessee, while determining the tax liability, escaped the amount paid to the various transport agencies exceeding Rs. 750 but less than Rs. 1,500, treating it as exempted by wrongly availing the benefit of Notification No. 34/2004-ST dated December 3, 2004 (as amended).

The Department, since in this case the gross amount charged for an individual consignment exceeds Rs. 750/-, is chargeable to service tax, whereas as per the exemption notification, the gross amount charged on an individual consignment transported in a goods carriage should not exceed Rs. 750 for availing of the exemption benefit. A show cause notice dated April 9, 2013, was issued to the assessee to explain why service tax amounting to Rs. 3,16,261 along with interest and penalty under Sections 76, 77, and 78 should not be imposed. The adjudicating authority confirmed the demand under the show cause notice. The appeal filed by the appellant was also rejected by the order, and hence the appeal has been filed.

The appellant argued that the services received by them do not fall under the definition of “goods transport agency” as no 'consignment note' has been issued by the service provider and referred to a series of decisions in support thereof. He also sought the exemption benefit under Notification No. 34/2004, as freight charges for the full truckload for an individual trip were less than Rs. 1500. The full truckload was for an individual consignee (appellant), and hence Clause (i) of the notification relating to the individual consignee is applicable, and as the gross amount did not exceed Rs. 1500 as prescribed in the same, it was exempted from the whole of the service tax.

The CESTAT held that in the absence of a consignment note, services cannot be considered GTA services, and the demand for service tax under the category of “goods transport agency” does not sustain.

Counsel For Appellant: O.P. Agarwal

Counsel For Respondent: Arun Sheoran

Case Title: M/s.White N White Minerals Pvt. Ltd. Versus Commissioner of Central Goods & Service Tax and Central Excise

Case No.: Service Tax Appeal No.54669 of 2023

Click Here To Read The Order