The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no Service Tax is payable on cartage charges which is related to payments made to the supplier of the goods which included the transportation cost and is not included under Goods Transport Agency (GTA) services.
The bench of Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that the amount/expenses/charges were not paid by the respondent directly to the transporter for transportation of any goods. Thus, the activity cannot be covered under GTA Services, hence, no service tax liability can be levied on the aforesaid amount/expenses/charges under GTA services.
The Respondents, M/s Globe Civil Projects Pvt. Ltd. (GCPL) are registered for providing “Commercial or Industrial Construction Service”, “Construction of Complex Service” and “Works Contract Service”.
The anti-evasion branch of service tax Commissionerate, Delhi initiated the investigation against GCPL based on the Intelligence that the respondent GCPL had not paid due service tax on taxable service relating to ‘Construction of Commercial or Industrial building and civil structure’ and ‘Works Contract’.
The service tax demand was raised on ‘freight and cartage expenses’ that amount shown as ‘Freight and Cartage Expenses’ in the balance sheet consists of expenditure towards cartage, transportation and pumping charges, transportation charges, insurance and car policy, side expenses and freight charges.
The amount shown as a ‘cartage’ is related to payments made to the supplier of the goods which included the transportation cost. Transportation and pumping charges are in respect of pumping of ready-mix concrete (RMC) material for construction activity. The aforesaid expenses also include expenses towards insurance and car policy and site expenses (payment made to cab supplier).
The amount/expenses/charges were not paid by the respondent directly to the transporter for transportation of any goods. Thus, the activity cannot be covered under GTA Services, hence, no service tax liability can be levied on the aforesaid amount/expenses/charges under GTA services.
The tribunal dismissed an appeal filed by the department.
Case Details
Case Title: Commissioner of Service Tax – Delhi III Versus M/s. Globe Civil Projects Pvt. Ltd.
Case No.: Service Tax Appeal No. 54328 of 2015 [DB]
Date: 03.03.2025
Counsel For Appellant: S.K. Meena
Counsel For Respondent: B.L. Narasimhan
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