Corporate guarantee taxability under GST faced challenge, with interim stay granted on the impugned order and notice.

A challenge to the levy and classification of corporate guarantees as taxable supplies under the CGST framework raised the question whether such guarantees issued for subsidiaries or related entities fall outside taxability, and whether any event would instead be governed by the IGST regime as an inter-State supply. Pending affidavits and further hearing, the operation and effect of the impugned order and show cause notice were stayed. The matter was therefore left open for further consideration, with no final determination on taxability or statutory classification at this stage.

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Issues: Whether the challenge to the levy and classification of corporate guarantee as a taxable supply warranted interim protection, and whether the impugned order and show cause notice should remain stayed pending reply.

Analysis: The Petition raised a substantive challenge that issuance of a corporate guarantee on behalf of subsidiaries or related entities is not a supply under the CGST Act and is not taxable under the CGST Act. An additional jurisdictional objection was raised that, even if taxable, the transaction is an inter-State supply governed by the IGST regime rather than the CGST and State GST laws. Pending affidavits and further hearing, the operation and effect of the impugned order and show cause notice were stayed.

Outcome: No final adjudication was made on the taxability or statutory classification of the transaction; interim stay was granted and the matter was kept pending for further consideration.

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