CESTAT Delhi Holds GTA Services Not Taxable as C&F Agency Services Under Common Agreement

Adarsh Marketing Vs Commissioner (CESTAT Delhi)

CESTAT Delhi allowed three appeals filed by M/s Adarsh Marketing and M/s Chhabra Enterprises against service tax demands concerning Goods Transport Agency (GTA) services provided under agreements with their principals. The appellants acted as clearing and forwarding (C&F) agents and, under the same agreements, provided both C&F Agent services and GTA services. They paid service tax on amounts received for C&F services but not on amounts received for GTA services.

Revenue contended that transportation of goods was integral to C&F Agent services and that the entire consideration should therefore be subjected to service tax as C&F Agent service. The appellants submitted that the agreements separately provided for the two services and their respective amounts, with transportation amounts being reimbursements of expenses. They further submitted that, since their principals were bodies corporate, any service tax liability on GTA services rested with the recipients under the reverse charge mechanism.

The Commissioner (Appeals) had upheld the demands. Before CESTAT, the appellants relied on an earlier Tribunal decision concerning M/s Aastha Solutions, where the Tribunal had held that a common agreement did not make separately remunerated C&F and GTA services a single bundled service. CESTAT also noted decisions holding that amounts collected for GTA services could not be included in C&F Agency service consideration merely because both services were provided under the same agreement. It found that the impugned order could not be sustained, set it aside, and allowed all three appeals, with consequential reliefs, if any.

Cases Discussed

• Commissioner of Customs, Central Goods, Service Tax and Central Excise, Indore vss. Awasthi Brother (CESTAT Delhi), 2025-VIL-1242-CESTAT-DEL-ST
• Ridhi Sidhi Logistics vs. Commissioner of Central Goods and Service Tax and Central Excise, Jodhpur (CESTAT Delhi), 2025-VIL-1561-CESTAT-DEL-ST

FULL TEXT OF THE CESTAT DELHI ORDER

1. In these three appeals M/s Adarsh Marketing¹ and Chhabra Enterprises², the appellants, are assailing the order in appeal no. 153-155(SM) ST/JPR/2021 dated 23.03.2021 passed by the Commissioner (Appeals), Jaipur in which he decided three appeals against the orders passed by the Additional Commissioner. The details are as follows:

2. We have heard Shri B.L. Narasimhan, learned counsel for Adarsh and Rinki Arora, learned counsel for Chhabra and Ms. Jaya Kumari, learned authorized representative for the department and perused the records.

3. Brief facts of the case are that the two appellants herein have entered into agreements with their principals to act as “clearing and forwarding agents”. As per the agreements, the appellants provided both services of “clearing and forwarding agent” and “Goods Transport Agency service”. The appellants paid service tax on the amounts which they received for C & F Agent services but did not pay service tax on the amounts received for goods transport agency services. The case of the Revenue is that the transportation of goods is an integral part of C & F agent service and, therefore, the entire amount received from the principals by the appellants should be treated as consideration for C & F Agent service and service tax should have been paid on such amount.

4. The case of the appellants, on the other hand, is that the appellants had provided two different services though under the same agreements with different amounts marked for the services. In fact, they have only received reimbursement of the expenses incurred towards the goods transportation. Since their principals are bodies corporate, service tax liability with respect to goods transport, if any, would lie with the principals and not with the appellants. The goods transport agency service cannot be combined with the clearing and forwarding agency services even though the two services were provided under the same agreements. The amounts paid for the two services were given separately in the Therefore, according to the appellants, no service tax was payable by them on the GTA services. Show cause notices were issued and demands were confirmed by the original authority which were upheld by the Commissioner (Appeals) in the impugned order relying on his own decision in Order-in-Appeal No. 149(SM)ST/JPR/2021 dated 18.03.2021 on an identical issue in respect of M/s Aastha Solutions. Learned counsel for the appellant submits that the aforesaid decision of the Commissioner (Appeals) was assailed before this Tribunal in Service Tax Appeal No. 50880 of 2021 and by Final Order No. 50336 of 2026 dated 23.02.2026, this Tribunal has set aside the order. The relevant portion of the order of this Tribunal is reproduced below:

“9. Considering the facts of the present case, we find that although the agreement is common, however, it explicitly provided special rates and remuneration for “C & F Agent‟s Services” and “Goods Transportation Services” which proves that they were not single „bundled‟ service. The transportation activity is classifiable as “Goods GTA Services” because the appellant issued serial numbered Goods Receipts/Consignment Notes for these activities. The principals were Body Corporates and as per Rule 2(1)(d)(d) of the Service Tax Rules, 1994, the liability to pay service tax on GTA services rested with the service recipients under the reverse charge mechanism and not on the appellant. Following the judicial discipline, we find that the issue in the present case is squarely covered by the earlier decisions referred above and, therefore, the impugned order needs to be set aside. The appeal is, accordingly allowed.”

5. We find in two other appeals on identical issue it has been held by this Tribunal that the amounts collected for providing GTA services cannot be included in the amounts received for C & F Agency services treating the two services as a single composite service even if both the services were provided as per the same agreement. These cases are as follows:

(i) Commissioner of Customs, Central Goods, Service Tax and Central Excise, Indore vss. Awasthi Brother³

(ii) Ridhi Sidhi Logistics vs. Commissioner of Central Goods and Service Tax and Central Excise, Jodhpur⁴

6. In view of the above, we find that the impugned order cannot be sustained and needs to be set aside. We accordingly, set aside the impugned order and allow all three appeals. The appellants will be entitled to consequential reliefs, if any.

[Order pronounced on 09/07/2026]

Notes:

1 Adarsh

2 Chhabra

3 2025-VIL-1242-CESTAT-DEL-ST

4 2025-VIL-1561-CESTAT-DEL-ST