The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a service tax demand against Best Road Carriers, holding that the mere transportation of goods by road does not qualify as a taxable Goods Transport Agency (GTA) service unless a consignment note is issued or ancillary services are provided.
The Tribunal ruled that, in the absence of these essential elements, the activity cannot be brought within the scope of taxable GTA services.
Judicial Member Dr Rachna Gupta and Technical Member Hemambika R. Priya held:
“Since under GTA it is only such of these services which are in relation to transport of goods by road which are taxable and not the actual transport of goods by road itself. And that appellant has not rendered any service in relation to transport of goods by road like loading / unloading nor even for reimbursing for damage and not issuing the consignment note except mere transport of Goods by road”
The dispute emerged when the income tax department disclosed data exhibiting that Best Road Carriers received payments of nearly Rs. 16.90 crore in FY 2014-15.
As per the TDS data, the service tax department deemed the receipts as consideration for taxable services and raised a demand of more than Rs 2.08 crore, along with interest and penalties.
It was claimed by Best Road Carriers that it exclusively transported goods via road as a Goods Transport Operator (GTO) and did not qualify as a Goods Transport Agency.
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It said that it just charged freight, did not issue consignment notes, did not register under the Carriage by Road Act, and did not undertake ancillary services such as loading, unloading, or warehousing.
The Tribunal ruled that a service provider qualifies as a GTA merely when it delivers transportation services and issues a consignment note, which creates a crucial regulatory prerequisite.
It also mentioned that Best Road Carriers merely transported goods from one place to another and that other entities managed loading and unloading. It stated that the department did not provide any proof exhibiting the issuance of consignment notes or norms of ancillary services. The bench repeated that-
“…The activity is held to be mere transport of goods by road as is covered under negative list, as already mentioned above. It being the activity not subject to tax, the adjudicating authority is held to have wrongly confirmed the demand…”
The Tribunal, referring to Section 66D(p) of the Finance Act, 1994, ruled that only transportation of goods by road comes under the negative list and does not levy service tax as GTA unless regulatory norms are fulfilled.
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Therefore, the CESTAT overturned the whole demand, marking that Best Road Carriers could not be deemed as a GTA in the absence of consignment notes or ancillary transportation services.
| Case Title | M/s. Best Road Carriers vs. Principal Commissioner of CGST |
| Service Tax Appeal No. | 51680 of 2022 |
| Counsel For Appellant | Shri Kashish Kumar Gupta |
| Counsel For Respondent | S.K. Meena |
| Delhi CESTAT | Read Order |
