The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has held that mere road transport without consignment note is not taxable as Goods Transport Agency (GTA) and it falls within the negative list of services and is not liable to service tax.

The bench of  Dr. Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has examined Section 65(50b) of the Finance Act, which defines a Goods Transport Agency as a person who provides services in relation to transport of goods by road and issues a consignment note. It observed that two conditions are essential for classification as a GTA. Firstly, provision of service in relation to transportation of goods by road and secondly, issuance of a consignment note by whatever name is called.

Department regarding payments received by the transporter during the financial year 2014-15. Based on TDS data under Sections 194C, 194H, 194I and 194J of the Income Tax Act, the Department found that the assessee had received approximately ₹16.90 crore during the relevant period. 

The Department alleged that these receipts represented consideration for taxable services and concluded that service tax amounting to ₹2.08 crore was payable. A show cause notice was issued proposing recovery of tax along with interest and penalties, which was subsequently confirmed by the adjudicating authority. 

Challenging the order, the transporter approached the Tribunal.

The appellant argued that it was engaged only in the activity of transporting goods by road and did not qualify as a Goods Transport Agency. It contended that it functioned merely as a Goods Transport Operator (GTO) and therefore its activities were covered by the negative list under Section 66D(p) of the Finance Act, 1994. 

The transporter emphasized that it did not issue any consignment notes, a critical statutory requirement for classification as a GTA. It submitted that a GTA and a GTO are legally distinct entities and that only GTA services are excluded from the negative list and subjected to service tax. 

The department argued that the appellant was registered as a provider of Goods Transport Agency services and had failed to furnish adequate evidence to establish exemption from service tax. The Department further alleged suppression of facts, noting that the receipts came to light only through information received from the Income Tax Department. 

According to the Department, the transporter had declared nil taxable turnover in its ST-3 returns and had not disclosed the transactions that later formed the basis of the demand. 

The Tribunal identified the central question as whether the transporter was a Goods Transport Agency (GTA), whose services were taxable, or merely engaged in transportation of goods by road, an activity covered by the negative list under Section 66D(p) of the Finance Act, 1994.

The Tribunal also referred to Rule 4B of the Service Tax Rules, 2004, which prescribes the particulars required in a consignment note, including details of consignor, consignee, vehicle registration number, origin and destination, and the person liable to pay service tax. 

The Bench reiterated that issuance of a consignment note is the distinguishing feature of a GTA. Relying on earlier judicial precedents, the Tribunal observed that GTA services may include ancillary activities such as loading, unloading, packing, unpacking, transshipment and warehousing, whereas a GTO merely transports goods by road without issuing a consignment note. 

The Tribunal noted that the appellant was not registered under the Carriage by Road Act, 2007, did not issue consignment notes, charged only agreed freight, and did not undertake ancillary transportation-related services. 

The evidence on record showed that loading was undertaken by the principal logistics company, transportation documents were supplied by that company, unloading was carried out by recipients, and the transporter’s responsibility was largely confined to movement of goods from one location to another. 

After analysing the statutory framework, the Tribunal held that the appellant’s activity amounted to mere transportation of goods by road, which falls within the negative list under Section 66D(p) of the Finance Act, 1994. Since the transporter neither issued consignment notes nor provided ancillary services associated with GTA operations, it could not be classified as a Goods Transport Agency. 

The Bench observed that no contrary evidence had been produced by the Department to establish that the appellant had undertaken GTA services. 

Holding that the Department had wrongly classified the appellant as a GTA, the Tribunal set aside the adjudication order and quashed the entire service tax demand of ₹2.08 crore, along with consequential liabilities. The appeal was allowed in favour of the transporter. 

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