Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 445

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
P.K. Choudhary, Judicial Member, P. Anjani Kumar, Technical Member
Ganpati Transport Service – Appellant
Versus
Commissioner Of Central Excise & CGST, Kanpur – Respondent
Service Tax Appeal No.70436 of 2025

Advocates:
For the Appellants/Petitioners: Shri S. R. Agrawal, Ms. Stuti Saggi
For the Respondents: Shri A. K. Choudhary

The issuance of a consignment note is an essential requirement to classify a service provider as a Goods Transport Agency under the Finance Act, 1994; in its absence, transportation services are excluded from taxability and the Revenue cannot invoke the extended limitation period based solely on third-party income data.

Headnote:(A) Finance Act, 1994 - Section 65(50b) - Section 66D(p) - Section 75 - Section 78 - Goods Transport Agency (GTA) - Taxability of transportation - Issuance of consignment notes - Held, that issuance of a consignment note is a statutory sine qua non for classification as a 'Goods Transport Agency' under Section 65(50b) of the Finance Act, 1994. Mere transportation of goods by a truck owner without such a note does not amount to GTA service and falls under the Negative List under Section 66D(p). (Paras 29-30)

(B) Show Cause Notice - Mandatory pre-show cause notice consultation - Para 5.0 of Master Circular No.1053/02/2017-CX - Requirement for cases involving tax demand exceeding Rs.50 lakhs - Held, that the absence of mandatory pre-consultation in cases exceeding the specified threshold vitiates the proceedings. (Para 28)

(C) Limitation and Evidence - Extended period of limitation - Invocation of extended period based on third-party income tax data alone - Held, that demand cannot be sustained in the absence of positive evidence proving fraud, suppression of facts, or intent to evade tax. (Paras 21-23)

Facts of the case:
The appellant is a transport partnership firm registered under the Service Tax department. The Revenue issued a Show Cause Notice (SCN) demanding service tax based solely on third-party income data from the Income Tax Department, alleging non-payment of tax on gross receipts. The appellant contended that income tax data does not reflect taxable service income and that their transportation activities either qualified for the Negative List or were subject to Reverse Charge Mechanism (RCM).

Findings of Court:
The Tribunal found that the SCN was issued without the mandatory pre-consultation for demands exceeding Rs.50 lakhs and that the department failed to examine the appellant’s books of account. Furthermore, the appellant’s transportation activities using their own vehicles without consignment notes did not constitute GTA services. The demand was held to be time-barred and unsupported by evidence of willful suppression.

Issues: Whether the service tax demand based on third-party income tax data is sustainable; whether the absence of pre-show cause notice consultation vitiates the order; and whether transportation by an owner-operator without consignment notes qualifies as taxable GTA service.

Ratio Decidendi: The demand is non-sustainable because the Revenue relied solely on income tax returns without examining the assessee's books, transportation via own vehicles without consignment notes falls under the negative list, and mandatory pre-adjudication consultation was bypassed.

Result: Appeal allowed.

Table of Content
1. overview of administrative history and procedure of the case. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8)
2. contentions regarding applicability of tax, reliance on third-party data vs books of account, and pre-consultation mandates. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19)
3. legal reasoning on limitation, evidence requirements, and necessity of consignment notes for gta service classification. (Para 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34)

P. K. CHOUDHARY:

The present appeal has been filed by the Appellant challenging the impugned Order-in-Appeal No.35-ST-APPL-ALLD 2025 dated 07.02.2025 passed by the Ld. Commissioner (Appeals) Customs, GST & Central Excise, Allahabad.

2. Briefly stated, the facts of the case are that the Appellant M/s. Ganpati Transport Service is a partnership concern engaged in ‘Transport of Goods by Road’ by engaging their own trucks as Goods Transport Operator and also as a ‘Goods Transport Agency¹1 GTA’ as defined in the Finance Act, 1994 for which they are duly registered with the Service Tax Department under Registration No. AAGFG0619KSD001.

3. The Appellant were under the bona fide belief that the service of ‘Transport of Goods by Road’ provided by them were exempted from levy of Service Tax as per Clause (p) of Section 66D of the Finance Act, 1994 i.e., Negative List as well as Service Tax on ‘Goods Transport Agency’ is payable under Reverse Charge Mechanism²2 RCM.

4. On the basis of third-party data received from the Income Tax Department, under the data sharing protocol, showing the receipts of Rs.6,08,06,849/- to the Appellant, it was alleged that the Appellant had rendered taxable services during the Financial Year 2015-16 and have not paid the applicable Service Tax on the said receipts.

5. On the aforesaid facts, Show Cause Notice³3 SCN dated 23.12.2020 was issued invoking extended period, directing the Appellant to show cause as to why service tax of Rs.88,16,993/- along with interest may not be demanded and recovered from the Appellant and as to why penalty be not imposed on them. The Appellant submitted at all the forums that SCN was never received by them. The SCN was adjudicated ex-parte against the Appellant confirming demand of service tax of Rs.88,16,993/- along with interest and equal amount of penalty was also imposed.

6. In the first round of appeal before the Ld. Commissioner (Appeals), the appeal was dismissed on the ground that the Appellant had deposited the mandatory deposit of 7.5% of the Service Tax liability disputed in the instant case in different Service Tax registration which could not be treated as pre deposit in the instant case. It was held that the Appeal filed by the Appellant is not maintainable.

7. Aggrieved by the aforesaid Order-in-Appeal, the Appellant preferred an Appeal before the Tribunal. The Tribunal remanded the matter to the Commissioner (Appeals) vide Final Order No.70518/2024 dated 08.08.2024 to decide the appeal on merits.

8. In the second round of Appeal in remand proceedings, the Ld. Commissioner (Appeals) vide the impugned Order-in-Appeal No.35/ST/APPL/ALLD/2025 dated 07.02.2025 reduced the demand of Service Tax to Rs.26,26,720/- after observing that the Appellants is a GTA Service provider and that the Service Tax is payable on 30% of the Taxable value. He imposed equal penalty under Section 78 of the Finance Act, 1994. Hence, the present appeal before the Tribunal.

9. The Ld. Advocate appearing on behalf of the Appellant submitted that the impugned Order-in-Appeal has been passed without considering the submissions made by the Appellants. The order is contradictory in itself in as much as the Ld. Commissioner (Appeals) admitted that 31 vehicles are owned by the Appellants and that a Chartered Accountant has certified that the Appellants are not issuing consignment notes in such cases but he on the other hand has not allowed the benefit legally available to the Appellants under the guis

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2026 Supreme(Online)(CESTAT) 445

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNALP.K. Choudhary, Judicial Member, P. Anjani Kumar, Technical MemberGanpati Transport Service – AppellantVersusCommissioner Of Central Excise & CGST, Kanpur – RespondentService Tax Appeal No.70436 of 2025

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
P.K. Choudhary, Judicial Member, P. Anjani Kumar, Technical Member
Ganpati Transport Service – Appellant
Versus
Commissioner Of Central Excise & CGST, Kanpur – Respondent
Service Tax Appeal No.70436 of 2025