2023 (10) TMI 169 - AT - Service Tax

Levy of Service Tax - corporate guarantee for associate enterprise - appellant claims that it has not received any consideration from the associated enterprise for providing the corporate guarantee - HELD THAT - This issue has been decided by the Supreme Court in COMMISSIONER OF CGST AND CENTRAL EXCISE VERSUS M/S EDELWEISS FINANCIAL SERVICES LTD. 2023 (4) TMI 170 - SC ORDER where it was 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. The order impugned in this appeal cannot be sustained - Appeal allowed.

Summary

Issues: The issue involved in this case is the applicability of service tax on corporate guarantee for associate enterprise.

Summary:
1. The appeals challenged an order passed by the Commissioner, Central Excise and CGST, New Delhi, regarding a show cause notice and a statement of demand for different periods.

2. The main issue in both appeals was whether service tax applied to corporate guarantees provided to banks on behalf of a holding company without receiving any monetary consideration.

3. The Commissioner found that providing corporate guarantees constituted a service taxable under the Finance Act, 1994, as it resulted in financial benefits to the appellant, even without direct monetary consideration.

4. The Supreme Court's decision in a similar case emphasized that the absence of consideration for corporate guarantees meant they did not fall under taxable services, as per the Finance Act, 1994.

5. The Court highlighted that the burden of proof regarding consideration rested with the department, and in this case, no evidence was presented to show any benefit received by the appellant for issuing corporate guarantees.

6. The Tribunal's judgment further clarified that without consideration, the issuance of corporate guarantees did not meet the criteria for taxable services under the Finance Act, 1994.

7. Consequently, based on the Supreme Court's ruling and the lack of evidence of consideration, the order under appeal was set aside, and the appeals were allowed.