Bills Issued By GTA Can Qualify As Consignment Notes If They Contain Essential Particulars: CESTAT Allahabad

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad has recently held that a document issued by a Goods Transport Agency (GTA) need not be titled a “consignment note” to qualify as one, as its substance and contents are material.

A bench comprising Judicial Member P. K. Choudhary and Technical Member K. Anpazhakan relied on the words “by whatever name called” in Section 65(50b) of the Finance Act, 1994, which defines a GTA.

The provision covers a person providing services relating to transportation of goods by road who issues a consignment note “by whatever name called”. 

“The expression "by whatever name called" makes it abundantly clear that the document issued by the service provider need not necessarily be titled as a "consignment note." What is material is the substance and contents of the document evidencing the transportation of goods. Therefore, merely because the Appellant issued bills instead of documents specifically titled as "consignment notes," the services rendered cannot be denied classification as Goods Transport Agency (GTA) Services. If the bills issued by the Appellant contain the essential particulars of a consignment note and acknowledge the transportation of goods, such bills are liable to be treated as consignment notes within the meaning of Section 65(50b) of the Finance Act, 1994,” the tribunal ruled.

The ruling came in two appeals filed by J.P. Logistics concerning service tax demands for April 2014 to March 2015 and April 2015 to June 2017. The demand for the first period was reduced from ₹26.28 lakh to ₹17.60 lakh by the Commissioner (Appeals), while the demand for the second period was ₹98.72 lakh.

J.P. Logistics was registered as a service provider for Clearing and Forwarding Agent Services, while GTA services were provided in the name of Trident Perishable Food Carriers, with both operating under the same PAN. The assessee had not collected or paid service tax on the GTA services because it was under the bona fide belief that the liability fell under the reverse charge mechanism.

The first issue before the tribunal was whether the assessee could be denied GTA classification because it had issued bills instead of documents specifically titled “consignment notes."

The tribunal held that the law does not prescribe a particular format or nomenclature for a consignment note. Bills containing the essential particulars of a consignment note and acknowledging transportation of goods could therefore be treated as consignment notes under Section 65(50b).

The assessee had relied on agreements with Mother Dairy Ltd. and Vadilal to contend that the services were in the nature of transportation of goods. It also produced certificates from Mother Dairy Ltd., Vadilal Industries Ltd. and Vadilal Enterprises Ltd. stating that they had received GTA services and discharged the applicable service tax under the reverse charge mechanism.

The tribunal found the certificates sufficient to establish that GTA services had been provided during the relevant period. It ruled that denying the benefit merely because the assessee had issued bills instead of documents titled “consignment notes” was unsustainable.

The tribunal also examined demands based on differences between Form 26AS and ST-3 returns. For 2014-15, Form 26AS showed receipts of ₹2.44 crore, against ₹32.25 lakh disclosed in ST-3 returns. For April 2015 to June 2017, the corresponding figures were ₹8.01 crore and ₹77.74 lakh.

It held that the demands were based on third-party information from the Income Tax Department and differences between Form 26AS and ST-3 returns, without examination of the assessee's books of account. Relying on its earlier decision in Quest Engineers & Consultant Pvt. Ltd., the tribunal observed that Form 26AS is not a statutory document for determining taxable turnover for service tax purposes.

On limitation, the tribunal noted that the assessee had regularly filed ST-3 returns and that the relevant information was already available to the Department when the first show cause notice was issued. It held that the subsequent SCN invoking the extended period on allegations of suppression was not sustainable.

“There would be no suppression of facts on the part of assessee if the facts were already in the knowledge of the Department when the first SCN was issued,” the tribunal observed.

The tribunal set aside both impugned orders and allowed the appeals with consequential relief in accordance with law.

For Appellant: Advocate Kartikeya Narain,

For Revenue: Manish Raj, Authorized Representative.