In a very interesting matter, the appellants have put the following contention for non-levy of service tax on Goods Transport Operator Servcies:

"The transporters were illiterate persons and they were not in the habit of issuing consignment note. They contended that this is not a tax on freight incurred or on services rendered by truck operators. They further argued that freight incurred in the following cases is not attracted.

(i) Consignors deliver their goods to the consignee on trucks arranged by them with a letter of advice to pay freight charges to the truck driver, and consignee pay freight charges to the driver on a voucher.

(ii) Truck operators call on appellants for loads. They do not issue consignment notes.

(iii) Way-side suppliers arrange trucks are not commercial concern or do not issue consignment note. They further contended that in such cases, there are no goods booking services is involved and truck operators are suppliers or consignors as the case may be, are not goods transport agency or their employees. They contended that they do not issue consignment note as defined in Rule 4(B) of Service Tax Rules, 1994. Hence, the transport operator's services do not fall under the scope of goods transport agency as defined in sub-section 50(b) of Section 65 of the Finance Act, and hence not taxable."

After considering the facts, honorable tribunal has ordered that:

All the statutory provisions which are mandatory are required to be strictly followed by tax payees. The administrative difficulties, illiteracy or any such inconvenience cannot be a ground for non-following of the statutory provisions. The transporters are bound to issue the consignment note or Bills or Challans as defined in Rule 4(B) of Service Tax Rules or any other serially numbered bills. Failure to do so would be a violation of law. The appellants, if they are finding difficulty in getting the consignment bill, then they should engage only those transporters who follow the law. 

(For full text of judgment - visit 2008 -TMI - 2522 - CESTAT, BANGALORE)

Consignment note requirement: failure to issue bills does not excuse non compliance and triggers statutory obligations for transport services. The tribunal held that compliance with mandatory statutory formats cannot be avoided on grounds of administrative difficulty or illiteracy; transporters are obliged to issue a consignment note, bills or challans as required by service tax rules, and failure to do so constitutes non-compliance, placing responsibility on taxpayers to engage transporters who observe the statutory regime.