CESTAT Allahabad: Service Tax Demand Based Solely on ITR Data Unsustainable; Own-Truck Transport Without Consignment Note Not GTA

March 24, 2026 : The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand against M/s Ganpati Transport Service, holding that a demand founded solely on Income Tax return (ITR) data, without independent verification of books of accounts, is legally unsustainable.

The Tribunal was dealing with an appeal arising from Order-in-Appeal dated 7 February 2025, wherein the Commissioner (Appeals) had partly upheld a service tax demand of ₹26.26 lakh after reducing the original demand of ₹88.16 lakh raised through a show cause notice dated 23 December 2020. The proceedings were initiated based on third-party data shared by the Income Tax Department reflecting receipts of ₹6.08 crore for FY 2015–16.

Demand Cannot Be Based Solely on ITR Data
The Tribunal noted that the entire case of the Department rested exclusively on third-party information received from the Income Tax Department, without any examination of the appellant’s books of accounts or supporting records. It emphasized that no effort was made to verify whether the alleged receipts represented taxable services under the Finance Act, 1994.

Relying on settled judicial precedents, the Bench held that demands raised merely on presumptions or discrepancies in ITR or TDS data, without corroborative evidence from the assessee’s records, cannot be sustained in law.

Own-Truck Transport Without Consignment Note Not GTA
On the issue of taxability, the Tribunal examined whether the appellant qualified as a Goods Transport Agency (GTA). It recorded that the appellant owned 31 trucks and, in several cases, transported goods using its own vehicles without issuing consignment notes.

The Bench held that issuance of a consignment note is a statutory sine qua non for classification as GTA under the Finance Act, 1994. In its absence, such activity does not fall within the taxable category of GTA services. Instead, transportation through own trucks without consignment notes falls under the negative list (Section 66D) and is not liable to service tax.

Reverse Charge Applies Where Consignment Notes Issued
For transactions where consignment notes were issued, the Tribunal noted that liability to pay service tax would shift to the consignor or consignee under the reverse charge mechanism in terms of Notification No. 30/2012-ST.

It further observed that the appellant had produced sample consignment documents indicating that service tax was payable by the recipient. The Department failed to produce any evidence to show that such recipients were not liable under reverse charge or that tax had not been discharged.

Extended Limitation Not Invocable
On limitation, the Tribunal held that the demand for the period prior to October 2015 was time-barred. For the remaining period, it found no evidence of fraud, suppression, or intent to evade tax. Accordingly, invocation of the extended period of limitation was held to be unjustified.

The Tribunal also noted that no pre-show cause notice consultation was conducted despite the demand exceeding ₹50 lakh, as mandated under departmental circulars. This procedural lapse further weakened the Department’s case.

Conclusion
In view of the absence of corroborative evidence, lack of taxability, and limitation defects, the Tribunal held that the service tax demand, along with interest and penalties, was unsustainable both on merits and on limitation. The impugned order was accordingly set aside and the appeal was allowed with consequential relief.

Case Details:
Case Title: Ganpati Transport Service v. Commissioner of Central Excise & CGST, Kanpur
Case No.: Service Tax Appeal No. 70436 of 2025
Coram: P. K. Choudhary (Member Judicial) and P. Anjani Kumar (Member Technical)