Goods transport agency service requires a consignment note; kilometre-based vehicle hiring without one was not taxable under reverse charge.

Transportation of goods by road is outside the negative list exclusion only where the service is provided by a goods transport agency issuing a consignment note. Under the Finance Act, 1994 and Rule 4B of the Service Tax Rules, a goods transport agency service requires transport by road with issuance of a consignment note. On the facts stated, no consignment note was issued and the vehicle hiring was on a kilometre basis, not linked to destination or quantity of goods. The arrangement therefore did not qualify as goods transport agency service, and service tax under reverse charge mechanism was not payable.

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Issues: Whether transportation of goods by road on kilometre basis without issuance of a consignment note amounted to service by a goods transport agency so as to attract service tax under reverse charge mechanism.

Analysis: The negative list under Section 66D of the Finance Act, 1994 excludes transportation of goods by road, but not services provided by a goods transport agency. A goods transport agency is one that provides transport of goods by road and issues a consignment note, as contemplated by Section 65(50b) of the Finance Act, 1994 and Rule 4B of the Service Tax Rules, 1994. On the facts found, no consignment note had been issued, either in the invoices or separately. The vehicle hiring arrangement was on kilometre basis and was not linked to the destination or quantity of goods transported. Such an arrangement does not fall within the statutory concept of goods transport agency service.

Conclusion: The demand of service tax under reverse charge mechanism was not sustainable and the assessee was entitled to relief.

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