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TMI Blog2023 (10) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income Tax Officer was appealed against before the learned Commissioner of Income-Tax (Appeals), Mumbai, which was allowed in favour of the appellants, with direction to the assessing officer to delete the addition, holding that no guarantee fee was actually charged on the loans concerned. Further, it is also found that the appellants did not charge any consideration for providing the corporate guarantees. Insofar as levy of service tax is concerned, the same should be on the amount of consideration received for provision of such service. In the present case, since there is no involvement of any commission amount in the form of consideration, the appellants cannot be saddled with the service tax liability as demanded in the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital facility availed by the associate enterprise. The corporate guarantees issued by the appellants are on behalf of their subsidiaries, where the appellants hold 100% or a significantly higher level of shareholding. There is, therefore no risk of the beneficiary companies defaulting on their obligation, since the appellant s investment in the beneficiary company is already at risk. The appellants had also maintained the statutory records pertaining to corporate guarantees issued to the parties as per the Regulations prescribed by the Ministry of Corporate Affairs, New Delhi under Notification dated 31.03.2014. In the event of non-fulfillment of the obligations to repay the clients (borrowers) on whose behalf the guarantee has been given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibid, on the appellants. Feeling aggrieved with the impugned order, the appellants have preferred this appeal before the Tribunal. 2. Heard both sides and examined the case records. 3. The Show Cause Notice dated 26.10.2017 was issued based on the results of investigation as mentioned therein at paragraph 9 in page 8. The department had accepted that the appellants had not charged any commission/fees to the overseas companies as well as the companies situated in India for issuance of the corporate guarantee. However, the service tax demand was confirmed on the basis of the calculation of notional income made by the appellants as per the requirements under the Transfer Pricing under the Income Tax Act, 1961. The department had also st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tracts from its employability to advance the case of Revenue. The decision of the Tribunal in re Neyveli Lignite Corporation Ltd deals with an entirely different set of facts and the explanation therein of guarantee , as commonly understood, for placing that dispute in a context is of no assistance here. 8. The criticality of consideration for determination of service, as defined in section 65B(44) of Finance Act, 1994, for the disputed period after introduction of negative list regime of taxation has been rightly construed by the adjudicating authority. Any activity must, for the purpose of taxability under Finance Act, 1994, not only, in relation to another, reveal a provider , but also the flow of consideration for renderin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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