2026 (3) TMI 592 - AT - Service Tax

Reverse Charge on GTA services: separately stated transportation charges are distinct and not includible in clearing and forwarding service value.

Where agreements separately state charges for transportation and clearing-and-forwarding, and transportation satisfies GTA formalities (serial consignment ... Remuneration for Clearing & Forwarding and transportation - Reverse charge liability for GTA services - double taxation - principles of interpretation of bundled services - Whether remuneration received on account of transportation of goods by “Goods Transport Agency” are required to be clubbed with “Clearing & Forwarding Agent's” remuneration for the purpose of levy of service tax. Clearing and Forwarding Services distinct from Goods Transport Agency services - Reverse charge liability for GTA services - Whether transportation charges paid to the appellant as Goods Transport Agency were required to be clubbed with Clearing & Forwarding Agents' remuneration for levy of service tax - HELD THAT:- The Tribunal in the case of Commissioner of Customs, Central Goods, Service Tax and Central Excise, Indore Vs. Awasthi Brother [2025 (8) TMI 169 - CESTAT NEW DELHI], where it was observed that the appellant is engaged in providing two services namely C & F Services and GTA Services. Both services though provided under the same contract are indicated separately with separate charges for each. In respect of GTA Services provided, the service tax on the value of such services was to be paid by the recipient of the services on the reverse charge basis. Undisputedly, this service tax was paid by the service recipient and this fact is also certified by the recipient of the services. The Tribunal held that where a single agreement separately specifies remuneration for C&F services and for transportation, the two services are distinct and not a single composite service. Transportation activities were held classifiable as GTA services because serially numbered goods receipts/consignment notes were issued and the contracts separately recorded rates for each service. Further, under the statutory scheme and Rule 2(1)(d)(d) of the Service Tax Rules, 1994, tax liability for GTA services in the present facts lay on the service recipient under reverse charge; therefore transportation consideration could not be included in the assessable value of C&F services to avoid double taxation. The Tribunal applied earlier decisions and administrative instructions reaching the same conclusion and set aside the impugned demand. [Paras 8, 9] Transportation charges attributable to GTA services are not to be clubbed with Clearing & Forwarding Agents' remuneration; the impugned demand is set aside and the appeal is allowed. Final Conclusion: The Tribunal allowed the appeal, holding that transportation services (GTA) with separately stated charges are distinct from C&F services and, being subject to reverse charge at the hands of the recipient, their consideration cannot be included in the assessable value of C&F services; the impugned demand was set aside. Issues: Whether remuneration recovered for transportation of goods by a goods transport agency, separately stated under the same agreement, must be included in the assessable value of clearing and forwarding agent services for service tax levy.Analysis: The agreements specified separate charges for clearing and forwarding services and for goods transportation. Transportation activity fulfilled requirements of GTA services including issuance of serial numbered goods receipts/consignment notes and reverse charge payment by corporate recipients as per Rule 2(1)(d)(d) of the Service Tax Rules, 1994. Prior authoritative decisions established that where distinct services are separately indicated with separate remuneration and where tax on GTA services is discharged by the recipient under reverse charge, transportation charges are not to be clubbed with clearing and forwarding agent services to avoid double taxation. Administrative instructions and CBEC guidance further support prevention of double charging where tax on transportation is payable by the recipient. Applying these legal principles and precedent to the facts - separate rates, issuance of consignment notes, and tax paid by recipients under reverse charge - leads to the conclusion that transportation remuneration is classifiable as GTA service and not includible in the value of clearing and forwarding services.Conclusion: Transportation remuneration stated separately under the same agreement is not includible in the assessable value of clearing and forwarding agent services; the impugned demand is set aside and the appeal is allowed in favour of the assessee.Ratio Decidendi: Where agreements separately specify charges for transportation and GTA service formalities (such as consignment notes) are complied with and tax on GTA is paid by the recipient under reverse charge, transportation charges cannot be aggregated into the value of clearing and forwarding services for service tax purposes as that would result in impermissible double taxation.