Hi Rahul,
Transit (in the EU) is all about moving goods that are under Customs control (that's to say, goods on which duty or refunds are liable). You can read about it on the EU web-site:
What is customs transit? - European commission
In the GTS system, Transit is transacted at the Delivery level (inbound and outbound), whereas Customs Declarations are normally created from Goods Receipts (inbound) and Billing Documents (outbound). You can read about it on the SAP web-site:
SAP Global Trade Services - SAP Library
Hope that helps to answer your question.
Regards,
Dave