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2025 (1) TMI 589 - HC - GSTSupply or not - levy of GST - seeking a declaration that the activity of the Petitioner issuing a corporate guarantee on behalf of its subsidiaries or related entities is not a supply under Section 7 of the Central Goods and Services Tax Act, 2017 - HELD THAT - It is directed that the affidavit in reply, if any, shall be filed within a period of four weeks from today and a copy of the same shall be served on the advocates for the Petitioner. If the Petitioner wants to file any affidavit in rejoinder, they may do so within a period of two weeks from the date of service of the affidavit in reply. In the meanwhile and without prejudice to the rights an contentions of the parties, and until further orders, the operation and effect of the impugned order dated 29th August 2024 and the impugned show cause notice dated 18th November 2024 are hereby stayed. Stand over to 18th February 2025.
In the case before the Bombay High Court, the petitioner sought a declaration that issuing a corporate guarantee for its subsidiaries or related entities does not constitute a "supply" under Section 7 of the Central Goods and Services Tax Act, 2017 (CGST Act) and is not taxable under Section 9 of the CGST Act. The petitioner also challenged certain Circulars, Rules, and Notifications as arbitrary and unconstitutional, violating Articles 14 and 265 of the Indian Constitution.
The petitioner contested an adjudication order and a subsequent show cause notice, arguing that even if the corporate guarantee is considered a supply of service, it should be classified as an interstate supply under the Integrated Goods and Services Tax (IGST) Act, rather than an intrastate supply under the CGST Act. The petitioner maintained that the provision of a corporate guarantee does not qualify as a supply of service under Section 7 of the CGST Act. The State, represented by Ms. Jyoti Chavan, sought time to file an affidavit in response, specifically addressing whether the CGST or IGST Act applies. The court allowed the State four weeks to file the affidavit and granted the petitioner two weeks to file a rejoinder if necessary. Pending further orders, the court stayed the operation of the impugned order and show cause notice. The matter is scheduled for further proceedings on February 18, 2025. The order will be digitally signed and can be acted upon via fax or email.
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