No Service Tax on Road Transport Without Consignment Note: CESTAT Kolkata

The appellant is in appeal against the impugned order wherein the demand of service tax of Rs.9,21,673/- has been confirmed along with interest and an equivalent amount of penalty under Section 78 of the Finance Act, 1994, was also imposed on the appellant.

2. The facts of the case are that the Appellant is a sole proprietorship concern which, during FY 2015-16, transported materials by road using its own trucks for M/s. East End Technologies Pvt. Ltd., M/s. KSS Petron Pvt. Ltd. and M/s. Universal MEP Projects & Engineering Services Ltd. at the IOCL Paradip Refinery Project. The Appellant did not issue any consignment note, and its invoices for ‘Transportation of Materials’ record Service tax as not applicable under reverse charge. Copies of the Work Order, Completion Certificate, Reconciliation Statement, Bill Statement and sample invoices are available in the Appeal Paper Book.

2.1 On the basis of data received from CBDT, Show Cause Notice dated 28.12.2020 was issued demanding Service tax of Rs.9,21,673/- at 14.5% on the entire gross receipts of Rs.63,56,367/- declared in the Income Tax Return (against NIL in the ST-3 returns), by best judgment assessment and invoking the extended period of limitation. The SCN did not specify the category of taxable service. The said receipts include Rs.95,877/- received as bank interest from Kotak Mahindra Bank Ltd.

2.2 The matter was adjudicated. The demand of service tax was confirmed along with interest and penalties were also imposed on the appellant.

2.3 Against the said order, the appellant filed an appeal before the Commissioner (Appeals), Bhubaneswar , who rejected the appeal holding that:

– the documents do not indicate the vehicle numbers, description of goods, quantity and rate, and the Appellanthas  not substantiated ownership of the vehicles; and

– in the absence of documentary evidence, Form 26AS alone is not sufficient to establish that the payments are towards transportation service.

2.4 Being aggrieved by the impugned Order, the appellant is before us.

3. The ld.Counsel for the appellant, submits that the transportation of goods by road without issuance of consignment note is not GTA service and is covered under the negative list.

3.1 She further submitted that under Section 66D(p)(i) of the Finance Act, 1994, services by way of transportation of goods by road fall in the negative list, except the services of a goods transportation agency; and under Section 65B(26), a goods transport agency is a person who provides service in relation to transport of goods by road and issues consignment note (Page 6). The Appellant did not issue any consignment note, and neither the SCN nor the orders below allege otherwise. Hence, the Appellant is not a GTA and its services are not taxable.

3.2 It is further submitted that the grounds on which the Commissioner (Appeals) rejected the appeal, namely vehicle numbers, description of goods, quantity, rate and ownership of vehicles, have no bearing on the levy, which turns only on whether consignment notes were issued. On this, there is neither any finding nor any evidence against the Appellant. To support her contention, she relies on the following case laws :

(i) M/s. Dipti Ranjan Mohanty v. Commissioner of CGST & CX, Bhubaneswar, Final Order No.76917/2025 dated 14.07.2025 – CESTAT KOLKATA,

(ii) M/s. Bajrang Enterprise v. Commissioner of CGST & CX, Kolkata South, Final Order No.76671/2025 dated 03.07.2025 – CESTAT KOLKATA,

(iii) M/s. Arjun Chandra Barman v. Commissioner of CGST & CX, Guwahati 2026 (4) TMI 303 – CESTAT KOLKATA ,

(iv) M/s. Devendra Nath Mahato & Sons v. Commissioner of CE & ST, Dhanbad 2026 (5) TMI 1667 – CESTAT KOLKATA

(v) M/s. Tabassum Enterprises v. Commissioner of CGST & CX, Kolkata 2025 (9) TMI 1275 – CESTAT KOLKATA.

3.3 She further submitted that the demand raised solely on the basis of Form 26AS/Income Tax data is not sustainable. She submits that the demand has been computed by applying 14.5% on the entire gross receipts in the Income Tax Return, without identifying any taxable service, and even includes Rs.95,877/- of bank interest. The Commissioner (Appeals) has himself held that Form 26AS alone cannot establish the nature of the receipts. The Department has thus not discharged its burden of proving that the receipts are consideration for a taxable service. Reliance is placed on Tabassum Enterprises and Arjun Chandra Barman (supra). Hence, the demand is liable to be set aside on this ground also.

3.4 She further submits that without prejudice, even if the services are considered as GTA services, no tax is payable by the appellant. She submits that all three service recipients are companies, i.e. body corporates. In terms of Paragraph I(A)(ii)(e) read with Sl. No. 2 of the Table to Notification No.30/2012-ST dated 20.06.2012, the entire Service tax on GTA service, where the person liable to pay freight is a body corporate, is payable by such person and not by the service provider (Pages 7 to 9). Reliance is placed on Bajrang Enterprise (supra). Hence, no Service tax is payable by the appellant in any event.

3.5 On limitation, she submits that the extended period of limitation is not invocable. It is her submission that the SCN for FY 2015-16 was issued on 28.12.2020, beyond the normal period, solely on the basis of CBDT data which was always available with the Department. The Appellant was registered, filed its ST-3 returns and disclosed its receipts in its Income Tax Return. The non-payment arose from its bona fide belief that the service fell in the negative list, as reflected in its invoices, and not from suppression with intent to evade tax.

Reliance is placed on Tabassum Enterprises (supra). Hence, the demand is barred by limitation.

3.6 She therefore, prays that the impugned order be set aside and the appeal be allowed with consequential benefits.

4. The ld.A.R. for the Revenue has justified the impugned order.

5. Heard both the parties and considered the submissions.

6. We find that it is fact on record that the appellant has given their trucks for transportation of materials by road to M/s East End Technologies Pvt. Ltd., M/s KSS Petron Pvt. Ltd. and M/s Universal MEP Projects and Engineering Services Ltd. at the IOCL Paradeep Refinery Project and have not issued any consignment notes. Therefore, it cannot be said that the appellant is a Goods Transport Agency under Section 65B(26) of the Finance Act, 1994, which defines that a Goods Transport Agency is a person who provides service in relation to transport of goods by road and issues consignment note. Admittedly,the a ppellant has not issued any consignment note.

7. On the similar issue,this Tribunal in the case of Dipti Ranjan Mohanty Vs. Commr. Of CGST & Central Excise, Bhubaneswar vide Final Order No.76917/2025 dated 14.07.2025, has been examined and observed as under :

”9. I find that in this case, the appellant, which is a sole proprietorship concern, has engaged in the activity of transportation of various materials to various destinations by road using its own truck. Further, it is also a fact borne on record that no consignment notes were issued by the appellant in relation to the above activity undertaken by them. Therefore, it is clear that the appellant falls outside the purview of ―Goods Transport Agency‖. Accordingly, I agree with the argument advanced by the appellant that they are not liable to pay Service Tax on the said activity, being covered under the Negative List in terms of Section 66D of the Finance Act, 1994. The relevant provisions are reproduced hereinbelow for ease of reference:

“66D. The negative list shall comprise of the following services, namely:—

….

(p) services by way of transportation of goods-

(i) by road except the services of-

(A) a goods transportation agency; or

(B) a courier agency;”

9.1. From the above, I observe that service tax is liable to be paid for transportation service, only when such service is rendered by a ‘Goods Transport Agency’ which issues ‘Consignment Note’. In this case, it is a fact on record that the appellant was not issuing ‘Consignment Note’. Accordingly, I hold that the activity undertaken by them are covered within the ambit ofNegative List in terms of Section 66D of the Finance Act, 1994 and hence, the appellant is not liable to pay Service Tax on the services rendered by them toM/s. Coalsale Company Ltd.

9.2. In this regard, I find it relevant to refer to the decision rendered by this Tribunal in the case of M/s. Bajrang Enterprise v. Commissioner of C.G.S.T. and Central Excise, Kolkata South [Final Order No. 76671 of 2025 dated 03.07.2025 in Service Tax Appeal No. 75119 of 2025 – CESTAT, Kolkata] wherein under similar facts and circumstances, it has been held as under: –

”6. In this case, it is a fact that the Appellant is a proprietorship concern with a single truck, providing transportation services without issuing consignment notes. Thus, I observe that the appellant cannot be classified as a Goods Transport Agency. Therefore, I find that the services provided by the Appellant fall squarely within the Negative List and hence the said activity is not taxable. The relevant provisions are reproduced here-in-below for ease of reference:

“66D. The negative list shall comprise of the following services, namely: —

(p) services by way of transportation of goods-

(i) by road except the services of-

(A) a goods transportation agency; or

(B) a courier agency;” –

6.1. I find that services provided for transportation of goods in individual capacity fall within the ambit of negative list as provided under Section 66D of the Finance Act. In this case, the Appellant, being a small sole proprietorship concern with a single truck, providing transportation services without issuing consignment notes, cannot be classified as a GTA. Therefore, I hold that the services provided fall squarely within the negative list and are not taxable.

6.2. I also find that the Appellant has submitted that even if the services are considered as GTA services, no tax is payable by them. I find merit in the submission of the Appellant. In this case, the appellant has provided transportation services to M/s. Balmer Lawrie Ltd., which is a Government company and hence, M/s. Balmer Lawrie Ltd. are liable to pay service tax under Reverse Charge Mechanism.

6.3. Moreover, in this case, the Appellant has claimed that the balance services are exempt as individual consignment values are below Rs. 1400/-. I find that this claim of the appellant has been admitted by the ld. appellate authority in the Order-in- Appeal, wherein he has recorded that the cash ledger submitted by the Appellant showed receipts of Rs. 750/- and Rs. 1400/-. As per Notification No. 25/2012-ST dated 20.06.2012, as amended, exemption is provided for:

“Services provided by a goods transport agency, by way of transport in a goods carriage of—

(b) goods, where gross amount charged for the transportation of goods on a consignment transported in a single carriage does not exceed one thousand five hundred rupees”

6.3.1. Since the individual consignment values, as admitted in the Order-in-Appeal itself, are Rs. 750/- and Rs. 1400/-, which are below the exemption limit of Rs. 1500/-, I hold that no service tax is payable on these services.

7. Accordingly, I hold that the demands of service tax confirmed in the impugned order is not sustainable and hence I set aside the same. Since the demand of service tax is not sustained, the question of demanding interest or imposing penalty does not arise.

8. In view of the above discussion, I set aside the impugned order and allow the appeal, with consequential relief, if any, as per law.”

10. I also take note of the submission made by the appellant that the transportation in this case has been rendered to M/s. Coalsale Company Limited,who in turn were to provide such service to M/s. Emami Paper Mills Ltd. and that M/s. Emami Paper Mills Ltd. have discharged Service Tax on the said service under reverse charge mechanism. Thus, I observe that effectively the Service Tax on this activity has already been paid by the ultimate service receiver. Accordingly, I find merit in the submission of the appellant that no Service Tax liability is cast on them in the instant case.

11. In view of the above discussion and by relying on the decision cited supra, I hold that demand of Service Tax confirmed against the appellant is not sustainable. Consequently, the demand of interest and imposition of penalties also do not survive.”

8. As discussed above, we hold that the appellant is not a Goods Transport Agency as had not issued any consignment note.

9. In that circumstances, the appellant is not liable to pay service tax. Consequently, the impugned demand is set aside.

10. In the result, the appeal is allowed with consequential relief, if any.

(Dictated and pronounced in the open Court)