2023 (4) TMI 170 - SCH - Service Tax

Taxable services or not - providing corporate guarantee to its group companies without consideration - banking and other financial services or not - HELD THAT - This was a case where the assessee had not received any consideration while providing corporate guarantee to its group companies. No effort was made on behalf of the Revenue to assail the above finding or to demonstrate that issuance of corporate guarantee to group companies without consideration would be a taxable service. In these circumstances, in view of such conclusive finding of both forums, there are no reason to admit this case basing upon the pending Civil Appeal No. 428 @ Diary No.42703/2019, particularly when it has not been demonstrated that the factual matrix of the pending case is identical to the present one. Appeal dismissed.

Summary

Issues involved: Challenge to concurrent finding in favor of the assessee regarding taxation of corporate guarantee without consideration.

Summary:
The petitioner challenged the concurrent finding in favor of the assessee regarding the taxation of a corporate guarantee issued without consideration. The Principal Commissioner GST and the CEST Tribunal had both ruled in favor of the assessee, stating that the issuance of a corporate guarantee without consideration does not constitute a taxable service. The petitioner argued that the case was similar to a previous case and should be admitted and tagged with the pending case. However, the respondent's counsel pointed out the relevant sections of the Finance Act, emphasizing that a service must be rendered for valuable consideration to be taxable.

The Commissioner's order highlighted that in this case, the Assessee claimed they had not received any consideration for the corporate guarantees issued. The department failed to prove otherwise or demonstrate how the Assessee benefited monetarily or non-monetarily from their subsidiaries. The Tribunal's judgment emphasized the importance of 'consideration' in determining taxability under the Finance Act, stating that without consideration, taxability does not arise. The judgment also clarified the distinction between 'consideration' and 'assessable value' for the levy of taxes.

Ultimately, the Court dismissed the Civil Appeal, as both forums had conclusively found that the assessee had not received any consideration for providing corporate guarantees to its group companies. The Revenue did not challenge this finding or show that issuing corporate guarantees without consideration would be a taxable service. Therefore, the Court saw no reason to admit the case based on a pending appeal, especially when the factual circumstances were not identical.