Vedanta Limited Vs Union of India & Ors. (Bombay High Court)
Vedanta Limited filed a writ petition challenging the imposition of Goods and Services Tax (GST) on the activity of providing corporate guarantees to its subsidiary under Section 9 of the Central Goods and Services Tax Act, 2017 (CGST Act). The petitioners sought a declaration that such activities should not be considered as “supply” or “supply of service” subject to taxation. They also contested the constitutional validity of a circular issued on 27th October 2023 that called for the tax to be levied, claiming it violated multiple provisions of the Constitution of India. The petitioners further challenged a notice from the Assistant Commissioner seeking information on corporate guarantees provided from July 2017 to March 2021.
During the hearing, the Respondents, represented by their counsel, informed the court that the audit process had concluded, and no further action would be taken based on the notice issued in February 2024. In light of this, the court acknowledged that the specific matter may not be relevant anymore but noted that the issue raised in the petition was recurring and pending in various High Courts. The Delhi, Telangana, and Punjab and Haryana High Courts had already passed orders staying the operation of the circular, highlighting the significance of the matter. The Bombay High Court granted time to the Respondents to file an affidavit-in-reply to address the constitutional challenge and the issue of corporate guarantees being taxable under GST. Meanwhile, the court stayed the effect of the impugned circular concerning item number 2 until further orders, providing temporary relief to Vedanta Limited. The case is ongoing, with the next steps involving further legal submissions.
