Case Law Details
Commissioner of CGST And Central Excise Vs Edelweiss Financial Services Ltd. (Supreme Court of India)
In a significant judgment, the Supreme Court of India has ruled that the issuance of a corporate guarantee on behalf of group companies by a director without consideration is not considered a taxable service. This landmark ruling was made in the case of Commissioner of CGST And Central Excise Vs Edelweiss Financial Services Ltd.
In its judgment, the court acknowledged that the concept of ‘consideration’ is crucial for defining a service under section 65B(44) of the Finance Act, 1994. The court noted that any activity must reveal a ‘provider’ and the flow of ‘consideration’ for rendering the service for it to be taxable under Section 66B of the Finance Act, 1994.
The court stated that there was no consideration insofar as the ‘corporate guarantee’ issued by Edelweiss Financial Services on behalf of their subsidiary companies is concerned. Moreover, the court pointed out that the onus was on the Department to prove that the assessee received either monetary or non-monetary consideration in any form, which it failed to do so.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
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