The Allahabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that a service provider cannot be denied classification as a Goods Transport Agency (GTA) merely because it issued bills instead of documents specifically titled as “consignment notes”, provided the bills contain the essential particulars evidencing transportation of goods.

The bench of P.K. Choudhary (Judicial Member) and K. Anpazhakan (Technical  Member) has observed that a Service Tax demand founded solely on differences between Form 26AS data and ST-3 returns, without independent examination of books of accounts and transactions, was legally unsustainable.

The assessee had obtained Service Tax registration as a provider of Clearing and Forwarding Agent Services and was also providing GTA services under the name “Trident Perishable Food Carriers”, with the same PAN.

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According to the assessee, it was charging and paying Service Tax on its taxable Clearing and Forwarding Agent Services and regularly filing ST-3 returns. However, it proceeded on a bona fide belief that its GTA services were covered by the reverse charge mechanism (RCM). It therefore did not collect Service Tax from recipients of the GTA services or deposit such tax with the Department.

The Department subsequently relied upon third-party information received from the Income Tax Department under a data-sharing protocol. For FY 2014-15, Form 26AS reflected receipts of ₹2.44 crore, whereas the ST-3 returns showed a gross value of only ₹32.25 lakh, resulting in a differential value of approximately ₹2.12 crore.

A show cause notice dated October 24, 2019 proposed Service Tax of approximately ₹26.28 lakh on the differential amount.

For the subsequent period from April 2015 to June 2017, the Department found receipts of approximately ₹8.01 crore in Form 26AS against a gross value of approximately ₹77.74 lakh reported in ST-3 returns. After accounting for Service Tax already paid, the Department proposed a further demand of ₹98.72 lakh.

Thus, the two proceedings involved proposed Service Tax liabilities of substantial value, apart from interest and penalties.

The assessee challenged the demands, contending that Service Tax could not simply be demanded by treating the values appearing in Form 26AS as taxable turnover.

For FY 2014-15, the Commissioner (Appeals) examined the agreement with Mother Dairy and concluded that the services supplied under that agreement were classifiable as GTA services. However, the same benefit was denied in respect of services supplied to Vadilal.

Consequently, the original Service Tax demand for that period was reduced from ₹26.28 lakh to ₹17.60 lakh. The appeal concerning the April 2015-June 2017 period was, however, rejected in its entirety.

The assessee thereafter approached the CESTAT.

One of the principal issues before the Tribunal was whether the assessee could claim GTA classification when it had issued bills rather than documents specifically described as “consignment notes”.

The Tribunal examined the definition of “Goods Transport Agency” under Section 65(50b) of the Finance Act, 1994, which covers a person providing services relating to transportation of goods by road and issuing a consignment note, “by whatever name called.”

CESTAT emphasized that the statutory definition does not prescribe any particular format or nomenclature for a consignment note.

According to the Tribunal, the words “by whatever name called” make it clear that the document need not necessarily carry the heading or title “consignment note”. What matters is the substance and contents of the document and whether it evidences the transportation of goods.

The Tribunal therefore held that merely issuing bills instead of documents specifically titled as consignment notes cannot by itself deprive the assessee of GTA classification. If the bills contain the essential particulars of a consignment note and acknowledge transportation of goods, they can be treated as consignment notes for the purposes of Section 65(50b).

The Tribunal also examined the underlying agreements.

With respect to Vadilal, the assessee pointed to a contractual clause under which the vehicle capacity was considered on the basis of the “Vadilal Big Tray” and the per-kilometre rate varied according to the carrying capacity of the vehicle. The assessee argued that this demonstrated that transportation of goods was the essential nature of the activity rather than merely a service calculated on kilometres travelled.

In relation to Mother Dairy, the agreement required bills to be supported by documents such as goods receipts, stock transfer orders, invoices or gate passes, including details concerning the temperature and quality of goods and date-logger reports.

These contractual features were relevant to determining the true nature of the services and had already led the Commissioner (Appeals) to accept the Mother Dairy activity as GTA service.

An important piece of evidence considered by CESTAT was the certificates issued by Mother Dairy Ltd., Vadilal Industries Ltd. and Vadilal Enterprises Ltd.

These recipients categorically certified that they had received GTA services from the assessee and had discharged the applicable Service Tax under the Reverse Charge Mechanism.

The Tribunal found these certificates to be reliable evidence establishing that the assessee had actually provided GTA services during the relevant period.

CESTAT also relied upon its earlier decision in Airvision India Private Ltd. v. Commissioner of Central Excise, Noida, where it had held that a certificate issued by the recipient on its letterhead could be sufficient evidence for GTA services and that a separate certificate was not required on every consignment note.

The Tribunal consequently concluded that the recipient certificates, coupled with the nature of the documents and transactions, were sufficient to establish the GTA character of the services.

The Tribunal also referred to its earlier decision in M.L. Agro Products Ltd. v. Commissioner of Customs, Central Excise & Service Tax, Guntur, which recognized that a consignment note may be issued in different forms because the statute does not prescribe a specific format.

Documents accompanying goods may constitute the relevant transportation document where they identify essential details such as the consignor, consignee and route of the consignment.

Applying these principles, the Allahabad Bench held that the denial of GTA classification merely because the assessee had issued bills rather than documents carrying the specific title “consignment note” was unsustainable.

The second major issue concerned the Department’s reliance on Form 26AS to determine the taxable value.

The Tribunal noted that the entire demand had been initiated on the basis of third-party information obtained from the Income Tax Department. The Department had compared the figures appearing in Form 26AS with the figures declared in ST-3 returns but had not independently examined the assessee’s books of accounts or the underlying transactions.

CESTAT found this approach legally deficient.

The Tribunal relied on its earlier decision in Quest Engineers & Consultant Pvt. Ltd. v. Commissioner, CGST & Central Excise, Allahabad, which held that Form 26AS is not a statutory document for determining taxable turnover for Service Tax purposes because the basis of Form 26AS and Service Tax payment are different.

Accordingly, the Tribunal held that a Service Tax demand cannot be sustained merely by treating the payments reflected in Form 26AS as taxable turnover without proper examination of the nature of the receipts.

CESTAT also found a serious limitation issue in the Department’s proceedings.

The assessee had been regularly filing ST-3 returns. Further, the Department had already issued a show cause notice for an earlier period. The Tribunal observed that the relevant information was available to the Department when the first notice was issued.

Therefore, according to the Tribunal, the Department could not subsequently rely upon substantially the same information to allege suppression of facts and invoke the extended period of limitation.

The Tribunal emphasized that where the material facts are already within the knowledge of the Department, suppression cannot subsequently be alleged merely to invoke the longer limitation period.

CESTAT further noted that the extended-period demand was based principally on the assessee’s Profit & Loss Account, Balance Sheet and Form 26AS information submitted to the Income Tax authorities.

The Tribunal referred to earlier decisions, including Firm Foundation and Housing Pvt. Ltd. v. Principal Commissioner of Service Tax, Chennai and Sigma Trade Wings v. Commissioner of Central Excise, Lucknow, in support of the proposition that reliance on Profit & Loss Account and Form 26AS, without more, could not sustain the Service Tax demand, particularly where the Department was already aware of the relevant facts.

The Tribunal therefore held that the impugned orders were unsustainable on limitation itself.

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