Shri Amman Steel and Allied Industries Private Limited Vs State Tax Officer – V (Roving Squad) (Madras High Court)
The case of Shri Amman Steel and Allied Industries Private Limited Vs State Tax Officer – V (Roving Squad) concerns a writ petition challenging an order that levied Goods and Services Tax (GST) on the furnishing of a corporate guarantee by the petitioner in favor of a related party, M/s. Shri Amman Steel and Allied Industries Private Limited.
Petitioner’s Stance and Assessing Officer’s Order
The writ petitioner’s specific stand was that they did not receive any consideration for furnishing the corporate guarantee. Despite this, the assessing officer held that the supply of the service of corporate guarantee by the petitioner to their related entity attracts the levy of GST. Tax was subsequently levied at 1% of the corporate guarantee amount.
Petitioner’s Defense and Reliance on CBIC Circulars
The petitioner had been issued a show cause notice prior to the impugned order, and they submitted a reply. In their reply, the petitioner placed reliance on two circulars:
1. Circular No. 199/11/2023-GST dated 17.07.2023
2. Circular No. 210/4/2024-GST dated 26.06.2024
The petitioner contended that since the recipient is eligible for full Input Tax Credit (ITC), and the writ petitioner did not issue any invoice, and the value of the transaction has been taken as zero, the aforesaid circulars were applicable to the transactions in question.
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