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Applicability of Service Tax on GTA service where goods are delivered in self owned vehicles - Whether the truck owners are liable to pay service tax when they send their own goods using their own trucks?

March 2, 2009
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This issue has been addressed by the honorable CESTAT in the matter of MSPL LTD. Versus CCE, BELGAUM reported in 2009 -TMI - 32448 - CESTAT, BANGALORE

The facts of the case are as under:

The appellants are actually manufacturers of Oxygen and Nitrogen. They transport the cylinders to their buyers in their own vehicle and collect the transportation charges. Revenue proceeded against them on the ground that they are providing the services of "Goods Transport Agency". Therefore, they are liable to discharge the service tax on the freight charges collected by them from their buyers. The Original Authority in his order confirmed the demand of service tax on the appellants. He demanded an amount of Rs. 12,11,140/- on  the ground that the appellants are a Goods Transport Agency rendering taxable service. He demanded interest under Section 75. Penalties were also imposed under Section 76, 77 & 78 of the Finance Act. The appellants were aggrieved over the order of the lower authority. Hence, they approached the Commissioner (Appeals). The Commissioner (Appeals) after examining the issue in the light of law set aside the original order, remanded the matter to the Adjudicating Authority to determine the liability of the appellants in the light of provisions of Section 68 (2) of the Finance Act read with Rule 2 (1) (d) (v) of Service Tax Rules, 1994.

Appellant submits the following arguments (in brief)

  1. The appellants use their own vehicles. They are the owners of the vehicle and they are not the Goods Transport Agency. …………………….. The appellants being the owners of the motor vehicles or goods carriage cannot be said to be their own agents providing the services of GTA to themselves as customers in relation to transportation of goods by road in goods carriage.
  2. The CBEC vide Circular No. 95/6/2007-ST dated 11.06.2007 has clarified in para 1, the nature and scope of the service of GTA.
  3. Speech of the Union Minister of Finance while presenting the Union Finance Bill 2004-05 - "58 services have been brought under the net so far. I propose to add some more this year. ………………… I may clarify that there is no intention to levy service tax on truck owners or truck operators. …..."

After hearing the argument of both the parties, CESTAT has ruled that:

On a very careful consideration of the entire issue, we find that the appellants transport the goods in their own vehicle to the buyer. The buyer is a person who actually pays the freight. It is very clear in terms of Rule 2 (1) (d) (v) that the liability to pay service tax is cast on the person who pays the freight. In this case the person who pays the freight is the buyer.

Therefore, the appellant has no liability to pay the service tax.


For full text of judgment - visit

MSPL LTD. Versus CCE, BELGAUM reported in 2009 -TMI - 32448 - CESTAT, BANGALORE

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