Service provider exempt from GTA service tax without consignment notes under Reverse Charge Mechanism

CESTAT New Delhi ruled in favor of the appellant regarding service tax liability under Reverse Charge Mechanism for Goods Transport Agency services. The Tribunal held that without issuing consignment notes/LR, a service provider cannot be categorized as GTA for service tax purposes. Following established precedent from CESTAT Ahmedabad, the Tribunal determined that even if goods transportation services were provided, absence of consignment notes exempts the appellant from GTA service tax liability. The impugned order was set aside and appeal was allowed.

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Issues:
The issues involved in the judgment are the liability to pay service tax under Reverse Charge Mechanism (RCM) under 'Goods Transport Agency' (GTA) for the appellants, namely M/s Vaishnav Marbles Pvt. Ltd., M/s Sai Nath Natural Stones, and Lalit Marmo & Granites.

Issue 1:
The appellants contended that they availed the services of transport operator and not of transport agency for inward transportation of raw material/goods to their factory, and therefore, the services rendered by Goods Transport Operator do not fall under the category of Goods Transport Agency. They argued that individual transporters or truck owners are not covered under GTA service, and the recipient is not liable to pay service tax under Reverse Charge Mechanism.

Issue 2:
The period covered in the appeals relates to both pre-negative era and the post negative era w.e.f. 1.07.2012. The relevant provisions for the period prior to 1.07.2012 are Section 65(50b) and 65(105)(ZZP) of the Finance Act, 1994, which defines the 'Goods Transport Agency' and the 'Taxable Service'. The new Section 65B (26) of the Finance Act came into existence with effect from 01.07.2012, deferring GTA.

Issue 3:
The issue in the present appeal pertains to service tax liability under 'Goods Transport Agency' where no consignment note is issued. The Tribunal referred to various decisions where it was consistently held that if a person has provided goods transport service but has not issued the consignment note, service tax cannot be recovered under the category of GTA. The case of the appellant was on the same footing as they availed the services of individual transporters and truck owners, and in the absence of issuing the consignment note, they cannot be made liable to pay service tax under the category of GTA.

In conclusion, the Tribunal set aside the impugned order and allowed all three appeals, stating that the settled principle of law is that without the issuance of a consignment note, service tax under the category of GTA cannot be recovered.

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