Generate professional replies to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
Step 1 – Issue Identification & Review
The AI analyses your query, notice, order, or uploaded documents and identifies the key issues involved.
• Review the issues identified by the AI • Add, edit, remove, or refine issues as required
Step 2 – Draft Generation
Once you approve the issues, the AI performs issue-wise legal research and prepares a structured draft response.
• Relevant statutory provisions • Judicial precedents and Supreme Court, High Court and other citations • Issue-wise legal analysis • Practical arguments and supporting content • Professionally structured draft ready for further review.
Parent company holding equity capital in subsidiary cannot be classified as supply of service for GST purposes under Section 5 IGST Act Section 7 CGST Act Karnataka HC held that a parent company holding equity capital in its subsidiary cannot be classified as supply of service for GST purposes under Section ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Parent company holding equity capital in subsidiary cannot be classified as supply of service for GST purposes under Section 5 IGST Act Section 7 CGST Act
Karnataka HC held that a parent company holding equity capital in its subsidiary cannot be classified as supply of service for GST purposes under Section 5 of IGST Act, 2017 read with Section 7 of CGST Act, 2017. The court followed its earlier decision in Yonex India case and ruled that show cause notices issued by tax authorities were without jurisdiction. The petition challenging GST levy on equity holding activity was allowed and notices were quashed.
Issues involved: The issues involved in this case include challenging the legality of levying GST on the activity of holding equity capital by the parent company, seeking to quash show cause notices proposing to demand IGST, and requesting further reliefs as per the circumstances of the case.
Challenge to GST Levy on Holding Equity Capital: The petitioner sought to hold that the levy of GST on holding equity capital by the parent company is illegal and without jurisdiction, citing the IGST Act and the CGST Act. The petitioner relied on a judgment in a similar case to support their argument.
Circulars Clarifying Holding of Shares: The court referred to Circulars issued by the Central Government and the State Government clarifying that holding shares of a subsidiary company by a holding company does not constitute a supply of service under GST. These Circulars were pivotal in determining the legality of the impugned order.
Decision and Disposition: The Court found that the holding of shares by the parent company in its subsidiary does not amount to a supply of service for GST purposes, based on the Circulars and the precedent set by a previous judgment. Consequently, the impugned show cause notices were deemed without jurisdiction or authority of law and were quashed.
Final Orders: The petition was allowed and disposed of in line with the precedent set by a previous case. The impugned show cause notices were quashed, affirming that the holding of shares by the parent company in its subsidiary does not constitute a supply of service under GST regulations.
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