2022 (2) TMI 1359

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.... its subsidiaries located within and outside India and not discharging tax liability thereto as provider of 'banking and other financial services' for the period prior to, and after, 30th June 2012, in order-in-original no. ME/COMM/KCG/13/ 2017-18 dated 27th October 2017 of Principal Commissioner of GST & Central Excise, Mumbai East. The show cause notice had proposed recovery of Rs. 97,95,62,947/-, comprising Rs. 3,22,01,255/- towards provision of guarantee to overseas companies for which consideration had been received and of Rs. 94,73,61,692/- towards guarantees provided free of charge to their Indian subsidiaries, for rendering taxable service under section 65(105)(zm) of Finance Act, 1994 till 30th June 2012 and 'service' defined in se....

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....) STR 220 (Tri.Bang.)] is inappropriate as the observations therein on taxability of the service should not have been ignored by the adjudicating authority. He also contends that the scope of 'guarantees', examined by the Tribunal in Commissioner of Central Excise & Service Tax (LTU), Chennai v. Neyveli Lignite Corporation Ltd [2017 (4) GSTL 145 (Tri.-Chennai)], reinforces the contention of Revenue that the 'taxable service' does encompass the activity. 3. Insofar as period after 1st July 2012 is concerned, it is contended by the Learned Authorised Representative that the emphasis placed by the adjudicating authority on 'consideration', which lacks definition in Finance Act, 1994, is not correct inasmuch as the respondent herein, even if n....

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....erve that '5. ..........Learned Counsel argued that these are corporate guarantees and we are not convinced. These are not the guarantees provided by a corporation for it's subsidiaries but are pure bank guarantees provided through banks by the service providers. Therefore, on merits, we find that the appellant received banking and financial services from abroad and is liable to discharge service tax under reverse charge mechanism.' which runs counter to the proposition put forth on behalf of Revenue. 6. The exclusion of 'corporate guarantee' extended by a holding company for the business activities of its subsidiary companies from the ambit of levy stands decided by the Tribunal in re DLF Cyber City Developers Ltd. It is also clear tha....

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....orporation Ltd deals with an entirely different set of facts and the explanation therein of 'guarantee', as commonly understood, for placing that dispute in a context is of no assistance here. 8. The criticality of 'consideration' for determination of service, as defined in section 65B(44) of Finance Act, 1994, for the disputed period after introduction of 'negative list' regime of taxation has been rightly construed by the adjudicating authority. Any activity must, for the purpose of taxability under Finance Act, 1994, not only, in relation to another, reveal a 'provider', but also the flow of 'consideration' for rendering of the service. In the absence of any of these two elements, taxability under section 66B of Finance Act, 1994 will n....