GTA service tax cannot be demanded from the transporter when eligible recipients have discharged it under reverse charge.

The appellant, a goods transport agency, provided transportation services during 2014–15 to four corporate entities.

The Department issued a show-cause notice based on Income Tax Return data, initially demanding service tax of ₹4,78,38,635.

The Principal Commissioner allowed abatement but confirmed ₹1,19,50,659 as service tax on GTA services, imposed a penalty under Section 78 of the Finance Act, 1994, and imposed ₹10,000 under Section 77.

The appellant maintained that the recipient companies were liable to pay tax under the reverse-charge mechanism (RCM), and produced consignment notes, bills and recipient declarations stating that the recipients had discharged the tax.

It also challenged the demand as based on ITR data without verification, disputed invocation of the extended limitation period, and objected to the absence of pre-show-cause-notice consultation.

1. Whether service tax on the appellant’s GTA services was payable by the recipient companies under Notification No. 30/2012-ST, making the demand against the appellant unsustainable.

2. Whether the demand could be sustained on the basis of ITR data without verification of the nature of the services, and whether the extended period of limitation was invocable.

3. Whether failure to conduct pre-show-cause-notice consultation invalidated the proceedings.

4. Whether the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, were sustainable.

Notification No. 30/2012-ST places service-tax liability on the person paying the freight for specified GTA services where that person falls within a listed category, including a body corporate.

A demand cannot be founded solely on income disclosed in an ITR or balance sheet without verifying that the amount relates to a taxable service; the Tribunal relied on Synergy Audio Visual Workshop P. Ltd. v. Commissioner of S.T. and Deltax Enterprises v. Commissioner of C. Ex. for this principle.

The Tribunal also relied on Kirloskar Oil Engines Ltd. v. CCE and Jaipur Jewellery Show v. Commissioner of C. Ex. & S.T. in considering the extended limitation period, and on Amadeus India Pvt. Ltd. v. Pr. Commissioner of C. Ex., S.T. & Central Tax regarding mandatory pre-show-cause-notice consultation under the Board’s instruction dated 21 December 2015 for covered cases.

Section 77 provides for penalty for the relevant statutory contravention, while Section 78 concerns penalty for the conduct supporting the demand; the Tribunal set aside the Section 78 penalty but maintained the ₹10,000 Section 77 penalty.

The Tribunal found that the four recipient companies were body corporates, had paid the freight, and fell within the categories specified in Notification No. 30/2012-ST.

The bills and declarations on record stated that the recipients were liable to pay service tax under RCM and had discharged that liability; consequently, a further demand on the appellant would amount to double taxation.

Independently, the notice relied on ITR data without investigating whether the amounts represented taxable services, and the Tribunal held that such data alone could not establish the tax liability.

It also found no basis to allege suppression with intent to evade tax where the demand arose from data received from the Income Tax Department, and concluded that the extended period was unavailable.

The Tribunal further held that the prescribed pre-notice consultation had not occurred and that the case did not fall within an exception to the Board’s instruction.

With the tax demand unsustainable and suppression not established, it set aside the Section 78 penalty, while leaving the Section 77 penalty intact.

The Tribunal upheld the ₹10,000 penalty under Section 77 for violation of Section 70 of the Finance Act, 1994.