Sowar Pvt Ltd Vs Commissioner of Service Tax (CESTAT Delhi)
CESTAT, New Delhi in Sowar Pvt. Ltd. v. Commissioner of Service Tax [Final Order No. 50607 Of 2023 dated March 29, 2023] held that no service tax is payable as the assessee did not receive any consideration for providing a corporate guarantee.
Facts:
M/s. Sowar Pvt. Ltd. (“the Appellant”) is providing services of repair and maintenance, installation service, renting of immovable property etc.
The Revenue Department verified the records for the period 2010-11 to 2014-15 and observed that the Appellant has given corporate guarantee on behalf of their associate enterprises M/s. Scintrex Geo Physical Services (India) Pvt. Ltd. and M/s. HGS India Ltd., to Syndicate Bank.
The Revenue Department alleged that the Appellant has provided banking and financial services to its associate enterprises and thereafter, issued a Show Cause Notice dated April 13, 2016 (“the SCN”) demanding service tax along with interest and penalty for providing services of corporate guarantee.
The SCN has been confirmed by the original adjudicating authority vide order No.667 of September 14, 2016.
The Appellant filed an appeal before the Appellate authority who vide Order-in-Appeal No.1/2016-17 dated May 12, 2017 (“the Impugned Order”) rejected the appeal.
Aggrieved by the Impugned Order, the Appellant filed an appeal before the CESTAT.
Issue:
Whether activity of providing corporate guarantee to associate enterprise is a taxable service?
Held:
The CESTAT, New Delhi in Final Order No. 50607 of 2023 held as under:
