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

Last updated: 23 June 2023
Quick Summary
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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