TMI Blog2023 (8) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... t-company/guarantor. Further, while bank guarantee involves a third party institution as guarantor, corporate guarantee involves a company within the same corporate group or structure as a guarantor - while referring the provisions contained in Section 65(12) of the Finance Act, 1994, may be because of typographical error or due to oversight of the provision clearly enumerating words as providing bank guarantee under sub-clause (ix) of the said provision, it has been noted that specific enumeration about corporate guarantee was not available for which legislative intent is unarguable. When both corporate guarantee and bank guarantee are held to be akin (similar to something) to each other, the only inference that can be drown is that incorporation of one of it would mean presence of the other. Having said so there are no second opinion on the issue that purpose of corporate guarantee and bank guarantee are one and same and while one is the species the other one is its genesis The appellant having received consideration against providing guarantee to its related company M/s Lavasa Corporation Ltd in the form of corporate guarantee and credit protection guarantee se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted above. 4. The matter was adjudicated upon and duty demand along with interest and penalties, as stated above, was confirmed against the appellant by the Commissioner in his order. The appellant is before us challenging the legality of the said order. 5. During the course of hearing of the appeal, Learned Counsel for the appellant, Shri Bharat Raichandani, submitted that the allegations against appellant that credit protection fee and fee for corporate guarantee received by the appellant from M/s Lavasa Corporation Ltd can never be considered as Banking and Other Financial Services for the reason that appellant is neither a body corporate nor a commercial concern as defined under section 65(12) of the Finance Act, 1994 since it is a registered company registered under the Indian Companies Act, 1956. In placing reliance on the judgment delivered in the case of Sterlite Industries India Ltd vs. Commissioner of GST and Central Excise, Tirunelveli reported in 2019-TIOL-879-CESTAT-MAD, he further submitted that corporate guarantee and bank guarantee bear different meanings and bank guarantee is a guarantee from bank /lending institution insuring the liabilities of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner and the same needs non interference by this Tribunal. 7. We have perused the case records, written submissions and the relied upon judgments. Before delving into the issue we would like to highlight on the distinction between corporate guarantee and bank guarantee and thereafter, proceed to deal with the provisions of law vis- -vis judicial precedent available on the issue. In the common parlance corporate guarantee is a guarantee of one corporate unit to keep itself responsible for the financial obligations or any other contractual obligations of the principal debtor to the creditor on behalf of principal debtor while bank guarantee is a guarantee given by the bank on behalf of the applicant to cover its payment obligations to third party. As held by the ITAT in Micro Inks Ltd vs. Assessee, ITA. Corporate guarantees are issued without any security whereas bank guarantee mostly require security against offer of such guarantee and financial instrument is issued by the bank or financial institutions towards the fulfillment of the party s financial obligations to a beneficiary. 8. Be that as it may, what can be observed is that both bank and corporate guarantees a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t available for which legislative intent is unarguable. For better clarity we reproduce para 6 of the said order to say that its first sub-para and last sub-para are carrying contradictory meaning, with reference to the statutory definition incorporated in between those two paras. 6. The exclusion of corporate guarantee extended by a holding company for the business activities of its subsidiary companies from the ambit of levy stands decided by the Tribunal in re DLF Cyber City Developers Ltd. It is also clear that, even if corporate guarantee is, in practice, akin to bank guarantee , the definition of banking and other financial services , viz. a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporate or [commercial concern], namely :- xxxxx (ix) other financial services, namely, lending, issue of pay order, demand draft, cheque, letter of credit and bill of exchange, transfer of money including telegraphic transfer, mail transfer and electronic transfer, providing bank guarantee, overdraft facility, bill discounting facility, safe deposit locker, safe vaults, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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