Tobacco Transport Through Individual Truck Owners Not GTA; CESTAT Hyderabad Quashes Service Tax Demand
Pranav B Prem
The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the service tax demand raised on Indian Tobacco Traders under the category of Goods Transport Agency (GTA) services, holding that transportation of tobacco leaves through individual truck owners cannot be taxed under the GTA service category in the absence of consignment notes. The Bench comprising A.K. Jyotishi (Technical Member) and Angad Prasad (Judicial Member) observed that even if a person provides transportation of goods by road, service tax under GTA can be levied only when the person issuing the service also issues a consignment note, which was admittedly not the case here.
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The appellant procured tobacco leaves from auction yards of the Tobacco Board and directly engaged individual truck owners and operators to transport the leaves, redried lamina and stems. The consideration for transport was paid directly to the truck owners, and the trucks were accompanied only by documents and challans issued by the appellant, while the transporters did not issue any consignment notes. Despite this, the Service Tax Department proceeded to levy tax, interest and penalties on the footing that the truck operators were “persons” providing transportation service after the amendment to the definition of Goods Transport Agency on 1 May 2006, and that slips or challans issued during transportation could be treated as consignment notes.
The Tribunal rejected this position and held that the statutory definition under Section 65B(26) of the Finance Act, 1994 read with Rule 4B of the Service Tax Rules, 1994 makes it mandatory that for a service to be classified as GTA, a consignment note must be issued and it must contain the prescribed particulars including name of consignor and consignee, vehicle registration number, description of goods, origin and destination and details of the person liable to pay tax. It emphasised that a consignment note cannot be treated as oral and cannot be substituted by weighing slips or vouchers unless the document contains all legally required particulars. The Bench stated that when the law requires a specific action to be done in a particular manner, it must be complied with in that manner only.
The Tribunal also considered judicial precedents cited by both parties. It noted that the decisions in M.L. Agro Products, S.V.R. Electricals and Coromandel Agro Products & Oils relied on by the Department were distinguishable, since those cases involved documents containing transport particulars. In contrast, the Tribunal relied on its own earlier orders in Chartered Logistics, Vaishnav Marbles, and Bothra Shipping Services, where it was held that transportation of goods by road does not constitute GTA service unless a consignment note is issued, and that no demand can be made from either consignor or consignee in such circumstances. The Hyderabad Bench pointed out that the Supreme Court had already upheld the ratio that the absence of a consignment note rules out the levy of service tax under GTA.
Since the record clearly showed that no consignment notes were issued by the individual truck operators, the Tribunal concluded that the demand raised under the GTA service category was unsustainable. It therefore set aside the service tax demand along with interest and penalties for all three appeal periods and allowed the appeals with consequential relief as per law.
Appearance
For Appellant: Advocate S. Sankaravadivelu
For Respondent: Authorised Representative Mr. A. Rangadham
Cause Title: Indian Tobacco Traders vs. Commissioner Of Central Tax Guntur - GST
Case No: Service Tax Appeal No. 30390 of 2018
Coram: A.K. Jyotishi (Technical Member), Angad Prasad (Judicial Member)
