Tribunal Confirms No Service Tax on Uncompensated Corporate Guarantees, Dismissing Revenue Appeal.

The Tribunal upheld the order-in-appeal, rejecting the Revenue's appeal and providing relief to the respondent. It concluded that no service tax could be charged on corporate guarantees provided without actual consideration. The Tribunal determined that service tax is applicable only on received consideration for taxable services, and since no consideration was received, the Revenue's argument was dismissed.

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Issues involved: Appeal against order-in-appeal allowing respondent's appeal and setting aside order-in-original u/s 65 (12) of the Finance Act, 1994 for non-charging of commission on corporate guarantees.

Summary:
The Revenue appealed against the order-in-appeal allowing the respondent's appeal and setting aside the order-in-original passed by the Additional Commissioner. The issue revolved around the respondent providing corporate guarantees without charging any commission or fees. The Revenue contended that a notional value equivalent to fees banks would have charged should be considered as a consideration for service tax purposes, even though no actual consideration was received by the respondent.

The Commissioner (Appeals) set aside the order-in-original, citing previous decisions that activities like these were not chargeable to service tax. The Revenue argued that corporate guarantees should fall under Banking & Financial Services, thus service tax should be charged on the consideration received for providing such guarantees. However, the respondent contended that no consideration was received for the corporate guarantees provided.

After considering the submissions, the Tribunal found that no consideration was received by the respondent for the corporate guarantees provided. It was established that service tax can only be charged on consideration received for taxable services, and since no consideration was received in this case, no service tax could be charged. The Tribunal upheld the impugned order, rejecting the Revenue's appeal and providing consequential relief to the respondent.

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