Personal guarantee by director not taxable as Business Support Services; demand and penalty were set aside.

Commission paid to an individual director for furnishing a personal guarantee to banks for a company loan was held not taxable under Business Support Services. The analysis relied on the Board's clarification dated 28.02.2006, which treated a personal guarantee given by a director in his personal capacity as outside the scope of that service. As the Revenue did not challenge the applicability of that clarification and produced no material to dislodge the Commissioner (Appeals)' finding, the demand and penalty were set aside and the Revenue's appeal failed.

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Issues: Whether commission paid to an individual director for giving a personal guarantee to banks for a company loan was taxable under Business Support Services.

Analysis: The impugned order had proceeded on the basis of the Board's clarification dated 28.02.2006, holding that the activity of giving a personal guarantee by a director in his personal capacity was not covered by Business Support Services. The Revenue did not assail the applicability of that clarification in the appeal, and no contrary material was shown to dislodge the finding of the Commissioner (Appeals).

Conclusion: The activity was not taxable under Business Support Services, and the Revenue's challenge failed.

Final Conclusion: The order setting aside the demand and penalty was sustained, and the Revenue's appeal stood rejected.

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