The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad has ruled that transportation of goods by road cannot be taxed as Goods Transport Agency (GTA) service when no consignment note is issued. The Tribunal set aside service tax demands raised against Indian Tobacco Traders and held that a consignment note is a mandatory statutory requirement for classifying a service under GTA.
The appeals stemmed from three Show Cause Notices alleging non-payment of service tax on outward freight for transporting tobacco leaves, redried lamina and stems. Indian Tobacco Traders, engaged in procurement and processing of tobacco, arranged transport by hiring individual truck operators. As recorded in the proceedings, these transporters did not issue any consignment note, bilty, challan or goods receipt.
Despite this, the Department treated the transactions as taxable under GTA, arguing that after the 2006 amendment replacing the term commercial concern with any person, transportation by individual truck operators would also attract service tax. Both the adjudicating authority and the first appellate authority upheld the tax demands with interest and penalties.
Before the Tribunal, the appellant submitted that without a consignment note, the basic condition for GTA classification is absent. They clarified that weighment slips and payment acknowledgments used in their internal system did not contain required particulars like serial numbers, consignor and consignee details, description of goods, vehicle number, origin and destination points, and tax liability. The appellant also relied on judicial precedents that consistently held that transportation by persons other than a goods transport agency falls under the Negative List.
Rejecting the Department’s stand, the Tribunal cited the Supreme Court-affirmed decision in Chartered Logistics Ltd. and the recent ruling in Bothra Shipping Services. It reiterated that a consignment note is essential for GTA classification and that the law does not recognize oral notes or informal slips as substitutes. Since the documents relied upon by the Department did not qualify as consignment notes, the Bench concluded that the service could not be taxed under GTA.
The Bench of Angad Prasad (Judicial Member) and A.K. Jyotishi (Technical Member) observed that the issue is no longer in dispute and held that transportation without a consignment note falls outside the scope of GTA. Once GTA classification fails, the Tribunal noted, any question of liability of consignor or consignee does not arise, and consequently, interest and penalties also cannot survive. The Tribunal allowed all three appeals and granted full relief to the appellant.
Cause Title: Indian Tobacco Traders vs. Commissioner of Central Tax
Case No: Service Tax Appeal No. 30390 of 2018
Counsel:
For Appellant: S. Sankaravadivelu
For Respondent: A. Rangadham
