Absence of Consignment Note Services can’t be considered as GTA Service: CESTAT sets aside Service Tax Demand [Read Order]

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The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) set aside the service demand and held that absence of consignment note services can’t be considered as GTA service.

In instant case, Assessee is a company engaged in the business of ice cream production clearing their goods through the specialised refrigerated van. The company entered into an agreement with the owners of the van for hiring their vehicle on hire charges at a fixed rate on kilometre basis.

The Assessing Officer entertained a view that service tax applicable since appellant paid said transportation charges to vehicle owners but did not discharge the service tax liability under the category of “Goods Transport Agency”.

The demand under GTA was confirmed by the adjudicating authority on the ground that the services involved are liable to be taxed as Goods Transport Agency. The Appellate Commissioner upheld the adjudication order. Hence these appeals were filed by the Appellant.

D. H. Nadkarni appeared at the behest of Assessee contended that no consignment note and only bills were prepared by the Van Owners. The advocate also added that it has to be shown that any consignment note was issued by the service provider to pay the service tax on Goods Transport Agency. In support of his contentions, he relied on various tribunals’ decision.

He also stated that hiring of refrigerated trucks on monthly basis by individual owners termed as the transfer of the right to use not Goods Transport Agency.

The bench comprising of Judicial Member Ramesh Nair and Technical Member Raju heard the contentions and perused the case records cited by them.

The tribunal noted that “when the vehicles are hired on monthly basis and the charges are not based upon destination but on kms basis, it cannot be said that the services involved are of Goods Transport Agency. Therefore in such case, no consignment is issued as the vehicles run on the direction of Appellant. The charges are fixed not on the basis of destination or quantity of goods or any other basis but solely on kms the vehicles have run in a month. Obviously, no consignment note is issued as the services are not on consignment to be taken to any particular destination and therefore the services would not fall under the category of Goods Transport Agency”.

The bench also called the attention of both the parties to the judgment of the Tribunal in South Eastern Coalfields Ltd. vs. CCE and hold that the demands of service tax under the category of “Goods Transport Agency does not sustain since the absence of consignment note services cannot be considered as GTA Service.

To Read the full text of the Order CLICK HERE