No Service Tax Payable On Bank Guarantee Provided To Group Of Company: CESTAT
The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax is leviable on the corporate guarantee provided by the appellant/assessee to various banks/financial institutions.The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that there is no consideration insofar as the “corporate guarantee‟...
The Chandigarh Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax is leviable on the corporate guarantee provided by the appellant/assessee to various banks/financial institutions.
The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that there is no consideration insofar as the “corporate guarantee‟ issued by the assessee on behalf of their subsidiary companies is concerned.
The appellants, M/s DLF Home Developers, are providing Business Auxiliary Services, Business Support Services, Construction of Complex Services and Renting of Immovable Property Services and have registered themselves for the same.
The appellant gave bank guarantees on behalf of their group companies and the Department intends to tax the same under Banking and Other Financial Services. However, there is no consideration flowing to the appellant.
The appellant contended that the department presumed without any evidence that the appellants had availed loans at a lower interest and collected more interest on the money invested in bank guarantees. The appellants have not charged any fee or interest on the bank guarantees provided by them to their group companies.
The department argued that the penalty in respect of Preferential Location Services has been correctly imposed as the appellants have not disclosed material facts to the Department and have not paid the applicable service tax.
The issue raised was whether the appellants are required to pay service tax under the Head “Banking and Other Financial Services” on their act of providing bank guarantees to their group companies.
The tribunal held that the Department has not adduced any evidence to the effect that the appellants have received any consideration in providing bank guarantees.
Counsel For Appellant: Anubhav Goel
Counsel For Respondent: Nikhil Kumar Singh
Case Title: M/s DLF Home Developers Limited Versus The Commissioner of Central Excise & Service Tax, Delhi-IV
Case No.: Service Tax Appeal No.60751 Of 2017