9911796707
TMI Blog2024 (3) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... 6/2022-23 Assignment No. 07/2022-23 dated 15.11.2022, ACCT/LGSTO-140/T-336/2022-23 Assignment No. 08/2022-23 dated 15.11.2022, ACCT/LGSTO-140/T-336/2022-23 Assignment No. 09/2022-23 dated 15.11.2022 and ACCT/LGSTO-140/T-336/2022-23 Assignment No. 10/2022-23 dated 15.11.2022 issued by Respondent No. 3 enclosed at Annexure-A, Annexure-A1, Annexure-A2 and Annexure-A3 respectively, proposing to demand and recover total IGST amounting to Rs. 48,44,27,296/- [Rs. 12,11,06,824/- per tax period] along with interest and penalty for the periods 2017-2018, 2018-2019, 2019-2020 and 2020-2021. b) hold that the levy of GST on the activity of holding equity capital by the parent Company in the Petitioner is illegal and without jurisdiction and is ultrav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2023 and 21.07.2023 issued by the Central Government and the State Government clarifying that the activity of holding of shares of subsidiary company by holding company per se cannot be treated as a supply of services by a holding company to the said subsidiary company and cannot be taxed under the GST. 4. In this context, it is pointed out that the petitioner is a subsidiary company of M/s. Yonex, Japan [a holding company] and mere holding of shares in a subsidiary company by the holding company cannot be construed or treated as "supply of service" in the light of the Circulars issued by the Central Government and the State Government. It is therefore submitted that in the light of the Circulars referred to supra, the impugned order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l be treated as a supply of service or not and whether the same will attract GST or not Securities are considered neither goods nor services in terms of definition of goods under clause (52) of section 2 of CGST Act and the definition of services under clause (102) of the said section. Further, securities include 'shares' as per definition of securities under clause (h) of section 2 of Securities Contracts (Regulation) Act, 1956. This implies that the securities held by the holding company in the subsidiary company are neither goods nor services. Further, purchase or sale of shares or securities, in itself is neither a supply of goods nor a supply of services. For a transaction/activity to be treated as supply of services, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the Karnataka Goods and Services Tax Act, 2017 (hereinafter referred to as "KGST Act"), hereby clarifies the issues as under. Sl. No. Issue Clarification Taxability of share capital held in subsidiary company by the parent company 1 Whether the activity of holding shares by a holding company of the subsidiary company will be treated as a supply of service or not and whether the same will attract GST or not Securities are considered neither goods nor services in terms of definition of goods under clause (52) of section 2 of KGST Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government and the State Government, mere holding of shares by the holding company in the subsidiary company cannot be classified, treated or construed as "supply of service" as clearly clarified and confirmed by the aforesaid Circulars by both the Central Government and the State Government. 7. Under these circumstances, I am of the view that in the light of the issuance of Circulars by the Central Government and the State Government during the pendency of the present petition, clarifying that holding of shares by M/s. Yonex Co., Japan [the holding company] in its subsidiary, the petitioner herein at Bengaluru cannot be treated or classified as "supply of service". The impugned order dated 02.11.2022 passed by the respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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