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2023 (8) TMI 1144
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.... amount as per provision of section 75 of the Finance Act, 1994 with equal penalty under Section 78 and additional penalty under Section 77 of the said Act against the appellant for providing 'corporate guarantee' to one M/s Lavasa Corporation Ltd against loan obtained from various financial institutions in exchange of 'credit protection fee' is assailed in this appeal. 2. The fact of the case, in a nutshell, is that the appellant M/s Hindustan Construction Company Ltd is a holder of service tax registration number, who had been engaged in providing various services. During the course of EA 2000 audit, it was noticed that for the period October 2008 to March 2013, the appellant had recovered fees against 'corporate guarantee' @ 1% of the....
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....never be considered as "Banking and Other Financial Services" for the reason that appellant is neither a "body corporate" nor a "commercial concern" as defined under section 65(12) of the Finance Act, 1994 since it is a registered company registered under the Indian Companies Act, 1956. In placing reliance on the judgment delivered in the case of Sterlite Industries India Ltd vs. Commissioner of GST and Central Excise, Tirunelveli reported in 2019-TIOL-879-CESTAT-MAD, he further submitted that 'corporate guarantee' and 'bank guarantee' bear different meanings and 'bank guarantee' is a guarantee from bank /lending institution insuring the liabilities of the debtor whereas 'corporate guarantee' is a guarantee in which corporation agrees to ta....
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....d DLF Cyber City Developers Ltd (supra) of the Tribunal cited supra were passed in the context in which there was no consideration flowing from the loanee to the guarantor. In supporting the reasoning and rationality of the order passed by the Commissioner he further submitted that it was also decided during the admission of the appeal against DLF Cyber City Developers Ltd (supra) that mere presumption that the associate of the assessee have received loan facility at a lower rate because of guarantee extended would be of no consequences if there was no consideration flowing from the banks/financial institutions or from their associates but in the instant case not only fee was collected by them but realization of the same happened in ever qu....
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....e parent-company/guarantor. Further, while bank guarantee involves a third party institution as guarantor, corporate guarantee involves a company within the same corporate group or structure as a guarantor. Apart from these thin line distinction, the core purpose of bank guarantee and corporate guarantee are almost similar for the reason that both provide a kind of assurance to the creditor and fulfill their obligations in the event the party for whom they stand guarantor fail to discharge its obligation. This being so, we are of the considered view that the distinction available in the Sterlite Industries India Ltd's case, cited above, at para 6.6 which has highlighted some of the operational differences in the working/functioning of those....
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....roduce para 6 of the said order to say that its first sub-para and last sub-para are carrying contradictory meaning, with reference to the statutory definition incorporated in between those two paras. "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 that, even if 'corporate guarantee' is, in practice, akin to 'bank guarantee', the definition of 'banking and other financial services', viz. 'a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporat....