Transport By Individual Truck Operators Without Consignment Note Not Taxable As GTA: CESTAT Bangalore

The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 24 March held that service tax under the Goods Transport Agency (GTA) category cannot be levied where transportation is undertaken through individual truck operators without issuance of consignment notes.

A Bench comprising Judicial Member Dr. D.M. Misra and Technical Member Bhagya Devi set aside the demand raised on freight expenses incurred for transportation of iron ore for export by Doddanavar Brothers, a mining exporter.

The Tribunal observed:

“An essential characteristic of provider of the service is the issuance of a consignment note… an individual truck operator… is merely performing the activity of transport of goods which is not the subject of the tax.”

Doddanavar Brothers was issued a show cause notice demanding service tax of Rs. 5.81 lakh on transportation charges amounting to Rs. 1.88 crore for the period 2007–08 under the Goods Transport Agency (GTA) category. The Department alleged that the assessee had failed to discharge service tax under the reverse charge mechanism on such freight expenses.

The adjudicating authority confirmed the demand, which was subsequently upheld by the Commissioner (Appeals), leading to the present appeal before the Tribunal.

The core issue before the CESTAT was whether service tax liability under GTA arises when goods are transported through individual truck operators without engaging any goods transport agency issuing consignment notes.

The Bench noted that the appellant had merely hired individual trucks for transporting iron ore from mines to the port and had not engaged any goods transport agency. It relied on settled jurisprudence that issuance of a consignment note is an essential requirement for classification as a “goods transport agency”.

The Tribunal held that in the absence of a consignment note and any agency relationship, service tax under the GTA category cannot be invoked.

It further observed that the transactions were reflected in the balance sheet and had been audited by the Department in 2009, whereas the show cause notice was issued only in 2013 without any allegation of suppression or misdeclaration. The Tribunal therefore held that the demand was barred by limitation.

Accordingly, the CESTAT set aside the impugned order and allowed the appeal with consequential relief.

Appearance for the Appellant: Mr. Pradyumna G.H., Advocate

Appearance for the Respondent: Mr. Maneesh Akhoury, Assistant Commissioner (AR)2