The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that transport service cannot be considered as “Goods Transport Agency” ( GTA ) service in the absence of a consignment note.
The appellant, M/s.White N White Minerals Pvt. Ltd is engaged as a receiver of services under the category of “Goods Transport Agency” ( GTA ) and registered under Service Tax. During audit, it was observed that the assessee had been recipient of services falling under the category of GTA and paying the service tax as per 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 3.12.2004 ( as amended ).
According to the Department, the gross amount charged for an individual consignment exceeds Rs.750/-, it 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 the exemption benefit.
Show cause notice was issued to the assessee as to 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 vide order-in-original dated 28.02.2022 confirmed the demand under the show cause notice. The appeal filed by the appellant was also rejected by the impugned order.
The Counsel for the appellant submitted that the services received by them do not fall under the definition of “Goods Transport Agency” as in terms thereof 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/- and that 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 therein the same was exempted from whole of the service tax.
Further challenged the invocation of the extended period of limitation as there was neither any suppression, fraud or wilful misstatement rather it was a case of interpretation of the applicability of the exemption notification.
It was viewed that to constitute a ‘Goods Transport Agency’, the provider of transportation service must issue the consignment notes or any other document by whatever name called.
The Tribunal found 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 and therefore the levy of service tax under the category of Goods Transport Agency is not sustainable.
The appellant has taken an alternative argument that freight charges related to the transportation of goods in a goods carriage and that the freight charges for the full truckload for an individual trip were less than Rs.1,500/- and that the full truck load was for an individual consignee ( appellant ). Such transportation of goods was exempted from the whole of service tax leviable thereon under notification no.34/2004-ST dated 03.12.2004 as amended.
While allowing the appeal, Ms Binu Tamta, Member ( Judicial ) set aside on the ground that the transport services were rendered by the individual truck or transport operators and therefore no consignment note was issued and as a result, the same would not fall within the scope of the definition of “Goods Transport Agency” as given in section 65(50 b) of the Finance Act, 1994.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
