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TMI Blog2024 (5) TMI 1060X X X X Extracts X X X X X X X X Extracts X X X X ..... bank Type of borrowing ECB Amount of ECB in USD 1. 11.09.2009 Japan Bank for International Coperation, Tokyo ECD 12.20 million 2 16.10.2009 Mizuho Corporate Bank Ltd., Singapore ECB 7.80 million 3 12.03.2012 Citibank, Bahamas ECB 40 million 4 02.09.2013 Sumitomo Mitsui Banking Corporation, Singapore ECB 35 million 2. The appellants are also observed to have entered into ECB Agreement/ Guarantee Fee Agreements dated 25.06.2009 and 30.09.2013 which mandate issuance of guarantee by the parent company i.e. M/s. Yamaha Motors Co. Ltd., Japan. Department formed an opinion that the appellant (M/s. India Yamaha Motor Pvt. Ltd.) has obtained loan facility from various banks and to make the banks extend the loan to M/s. India Yamaha Motor Pvt. Ltd. (appellant), parent company of the appellant has agreed to issue its guarantee of re-payment of loan to the banks. Accordingly, a Show Cause Notice No.36-7/2015 - 16 dated 17.04.2015 was served upon the appellant alleging non-payment of Service Tax under reverse charge mechanism required to be paid for the services provided by the parent company of appellant in Japan to the appellant in relation to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r under challenge which has confirmed the entire demand for the entire period, is therefore prayed to be set aside. Appeal is, accordingly, prayed to be allowed. 5. While rebutting these submissions, ld. Departmental Representative has reiterated the findings in the order under challenge where it has specifically been held that the issue involved is with reference to the act of lending. Hence the same has to be covered under the definition of Banking and Financial Services for pre as well as post period of negative list ( w.e.f. pre as well as post 1st July 2012). Ld. Departmental Representative has relied upon the following two decisions:- 1. M/s. Paramount Communications Ltd. vs. Commissioner of Central Excise, Delhi-I reported as 2018-TIOL-3820-CESTATDEL 2. M/s. Gitanjali Gems Ltd. vs. Commissioner of Service Tax, Mumbai-I reported as 2016-TIOL-874-CESTAT-MUM. 6. Having heard the rival contentions and perusing the record, we observe and hold as follows:- The appellant in order to secure a loan from various foreign banks and financial institutes has entered into an agreement with its parent company situated in Japan for the corporate guarantee to be provided by the paren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanging provided by a foreign exchange broker or an authorised dealer in foreign exchange or an authorised money changer, other than those covered under sub-clause (a); Explanation. - For the purposes of this clause, it is hereby declared that "purchase or sale of foreign currency, including money changing" includes purchase or sale of foreign currency, whether or not the consideration for such purchase or sale, as the case may be, is specified separately; The taxable service is defined under Section 65(105)(zm) also needs to be considered which reads as under : "Taxable Service" means any service provided or to be provided to any person, by a banking company or a financial institution including a non-banking financial company or any other body corporate or commercial concern, in relation to banking and other financial services". Finally definition of 'Consideration' has to be seen which reads as follows:- "consideration" includes (i) any amount that is payable for the taxable services provided or to be provided; (ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the definition of service in Section 65 B (44) of Finance Act, 1944 becomes relevant. It reads as follows : - Service means 'any activity carried out by a person for another for consideration and includes declared service but not includes the services listed in the negative list under section 66B of the Act'. 10. Reverting to the facts of the present case, we observe that the Show Cause Notice itself recites that the parent company of appellant has given the corporate guarantee. Though there is guarantee fee agreements dated 25.06.2009 & 30.06.2013 executed between appellant and the parent company by virtue of which appellant is paying guarantee fee. But since it is already held that providing corporate guarantee cannot be called as providing BOFS, prior to 01.07.2012, the amount in lieu thereof cannot qualify for the definition of 'consideration' as mentioned above. Apparently parent company of appellant is not in business of lending. To our opinion the act of providing a corporate guarantee is a separate mechanism to secure the lending transaction and is not related to the lending activity. It stated that the definition of "Banking and Other Financial Services provided in Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the appellant has benefited the associate enterprises in two ways as quoted above. We further observe that issue is no more res-integra as has also been conceded on behalf of the department. The decisions relied upon by the appellant DLF Projects Ltd. (supra) and DLF Cyber City Developers (supra) have already held as follows:- "4. It is an admitted fact that the appellant has not received any consideration either from the financial institutions or from their associates for providing corporate guarantee, in that circumstances, no service tax is payable by the appellant. Moreover, the demand raised in the show cause notices are on the basis of assumption and presumption presuming that their associates have received the loan facilities from the financial institution at lower rate, therefore, the differential amount of interest is consideration, but there is no such evidence produced by the Revenue on that behalf. In that circumstances, we hold that the appellant is not liable to pay any service tax on corporate guarantee provided by the appellant to various banks/financial institutions on behalf of their holding company/ associate enterprises for their loan or overdraft facili ..... X X X X Extracts X X X X X X X X Extracts X X X X
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