The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that the service tax cannot be levied on ‘Goods transport agency’ services if consignment notes are not issued.
The department, after inquiry found that the appellant failed to pay service tax on ‘goods and transport agency services.’. The department was of the view that by virtue of payment of freight charges, is a person liable to pay service tax and the freight amount is liable to Service Tax under “transport of goods by road service.’
The two-member of the Tribunal comprising CESTAT President Justice Dilip Gupta and Technical Member P V Subba Rao observed that “the ‘Goods transport agency’ service has been defined in section 65(26) of the Finance Act to mean any person who provides service in relation to transport of goods by road and issues consignment notes, by whatever name called. In the present case, consignment notes have not been issued and so the activities cannot be said to be covered under ‘goods transport agency’ services.”
The bench, while granting relief to the appellants, further relied on the decision of the Tribunal in Bhoramdeo Sahakari Shakhar Utpadam Karkhana vs. Commissioner of Customs, Central Excise & Service Tax, Raipur, wherein it has been held that service tax can be levied only if consignment notes are issued.
“Thus, service tax liability could not have been fastened on the appellant under the reserve charge mechanism,” the bench concluded.
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