9911796707
TMI BlogServices of extending corporate guarantee without any consideration is not considered as a serviceX X X X Extracts X X X X X X X X Extracts X X X X ..... Services of extending corporate guarantee without any consideration is not considered as a service X X X X Extracts X X X X X X X X Extracts X X X X ..... tax is payable by the assessee. Facts: M/s. Sowar Pvt. Ltd. ("the Appellant") is providing services of repair and maintenance, installation service, renting of immovable property etc. The Revenue Department verified the records for the period 2010-11 to 2014-15 and observed that the Appellant has given corporate guarantee on behalf of their associate enterprises M/s. Scintrex Geo Physical Servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces (India) Pvt. Ltd. and M/s. HGS India Ltd., to Syndicate Bank. The Revenue Department alleged that the Appellant has provided banking and financial services to its associate enterprises and thereafter, issued a Show Cause Notice dated April 13, 2016 ("the SCN") demanding service tax along with interest and penalty for providing services of corporate guarantee. The SCN has been confirmed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e original adjudicating authority vide order No.667 of September 14, 2016. The Appellant filed an appeal before the Appellate authority who vide Order-in-Appeal No.1/2016-17 dated May 12, 2017 ("the Impugned Order") rejected the appeal. Aggrieved by the Impugned Order, the Appellant filed an appeal before the CESTAT. Issue: Whether activity of providing corporate guarantee to associate en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terprise is a taxable service? Held: The CESTAT, New Delhi in M/S. SOWAR PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX, DELHI-II - 2023 (5) TMI 193 - CESTAT NEW DELHI held as under: * Observed that, the SCN stated that the Appellant has given the corporate guarantee on behalf of their group companies but has not charged any commission or interest or fees for providing the said corporate guarant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. * Further observed that, the definition of banking and other financial services (BFOS) and stated that only such persons can be made liable to service tax who can be classified in the category of Banking/ Non-banking Company, Financial Institutions, any other body corporate or a commercial concern. * Further stated that, the definition of BFOS uses the word 'means' i.e. the services compr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehensively and specifically listed in the definition would alone be excisable to service tax. * Referred the judgement of M/S DLF PROJECT LIMITED VERSUS C.C.E & S. T- GURGAON I - 2020 (6) TMI 418 - CESTAT CHANDIGARH and M/S DLF CYBER CITY DEVELOPERS LIMITED AND MS DLF UTILITIES LTD. VERSUS CST, DELHI-IV - 2019 (9) TMI 1123 - CESTAT CHANDIGARH, wherein court held that the Appellant has not receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed any consideration either from the financial institutions or from their associates for providing corporate guarantee, so no service tax is payable by the Appellant. * Held that, the Appellant do not fall under any of such category listed in the definition. Further, there is no denial to the fact that Appellant is not in business of financing. Accordingly, the Appellant is not liable to pay an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y service tax on corporate guarantee provided to various banks/financial institutions on behalf of their associate enterprises for their loan or overdraft facility under Banking and Financial Institutions.
* Set aside the Impugned Order.
(Author can be reached at [email protected]) X X X X Extracts X X X X X X X X Extracts X X X X
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