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TMI Blog2024 (2) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral 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. 4 which proceeds on the basis that the said holding of shares amounts to supply of service is clearly illegal, arbitrary and without jurisdiction or authority of law, and the same deserves to b e quashed. The impugned order dated 02.11.2022 issued by the respondent No. 4 is hereby quashed - Petition allowed. - HON'BLE MR JUSTICE S.R. KRISHNA KUMAR For the Petitioner : (By Sri. Arun Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / other writ, direction or order to QUASH the Impugned Order issued by Respondent No. 4 dated 02.11.2022 bearing No. ACCT/(A)-2.8/GST/DRC-7/1/T. No. 508/2022-23 (Annexure-D.) 2. Heard Sri. K. Arun Kumar, the learned Senior counsel for the petitioner, Sri. Narendra A., the learned CGC for the respondent No. 1, Sri. Shamanth Naik, the learned HCGP for the respondent Nos.2 to 4 and Sri. Jeevan J. Neeralgi, the learned standing counsel for the respondent Nos. 5 and 6. Perused the material on record. 3. In addition to reiterating the various contentions urged in the petition and referring to the material on record, the learned Senior counsel for the petitioner invited my attention to the Circulars dated 17.07.2023 and 21.07.2023 issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of shares in a subsidiary company by the holding company will be treated as 'supply of service' under GST and will be taxed accordingly or whether such transaction is not a supply. 2. In order 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 Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act ), hereby clarifies the issues as under: Issue Clarification Taxability of share capital held in subsidiary company by the parent company 1. Whether the activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y by the 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 GST. 3. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. 4. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board, Hindi version would follow. Similarly, the State Government also issued Circular dated 21.07.2023 on the same lines, which reads as under: Representations have been received from the trade and field formations seeking clarification on certain issues whether the holding of shares in a subsidiary company by the holding company will be treated as &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s supply of services, there must be a supply as defined under section 7 of KGST Act. It cannot be said that a service is being provided by the holding company to the subsidiary company, solely on the basis that there is a SAC entry '997171' in the scheme of classification of services mentioning: the services provided by holding companies, ie, holding securities of (or other equity interests in) companies and enterprises for the purpose of owning a controlling interest. , unless there is a supply of services by the holding company to the subsidiary company in accordance with section 7 of KGST Act. Therefore, the activity of holding of shares of subsidiary company by the holding company per se cannot be treated as a supply of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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