Services of extending corporate guarantee without any consideration is not considered as a service

Last updated: 23 June 2023

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The CESTAT has ruled that a company providing a corporate guarantee for its associate enterprises without receiving any payment, such as commission or fees, is not liable to pay service tax. The tribunal found that the activity did not fall under the definition of taxable banking and financial services, especially since the company was not in the business of financing. Consequently, the demand for service tax, interest, and penalty was set aside.

Court :
CESTAT, New Delhi

Brief :
The CESTAT, New Delhi in Sowar Pvt. Ltd. v. Commissioner of Service Tax [Final Order No. 50607 Of 2023 dated March 29,2023] held that assessee has not received any consideration for providing corporate guarantee and hence no service tax is payable by the assessee.

Citation :
Final Order No. 50607 Of 2023 dated March 29,2023

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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