2024 (2) TMI 59

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....s for the following reliefs: a) ISSUE an appropriate writ, direction or order to STRIKE DOWN the Impugned Notifications issued by Respondent Nos. 1 and 2 ie. Notification dated 28.06.2017 bearing No. 11/2017-Central Tax (Rate) (Annexure-A) at Entry No. SAC 997171, and Notification dated 28.06.2017 bearing No 08/2017-Integrated Tax (Rate) (Annexure- B), at Entry No. SAC 997171, to the extent that they provide for the machinery to tax holding equity of subsidiary companies, as being ultra vires the Central Goods and Services Act, 2017, Karnataka Good and Services Tax Act, 2017 and Integrated Goods and Services Tax Act, 2017; b) CONSEQUENTLY ISSUE an appropriate writ, direction or order to STRIKE DOWN the Explanatory Notes to....

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.... the GST. 4. In this context, it is pointed out that the petitioner is a subsidiary company of M/s. Yonex, Japan [a holding company] and mere holding of shares in a subsidiary company by the holding company cannot be construed or treated as "supply of service" in the light of the Circulars issued by the Central Government and the State Government. It is therefore submitted that in the light of the Circulars referred to supra, the impugned order dated 02.11.2022 is without jurisdiction or authority of law, and the same deserves to be quashed. Under these circumstances, the learned Senior counsel submits that the petitioner would not press Prayer Nos. A and B sought for in the petition. 5. Per contra, the counsels for the respondents, s....

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....id section. Further, securities include 'shares' as per definition of securities under clause (h) of section 2 of Securities Contracts (Regulation) Act, 1956. This implies that the securities held by the holding company in the subsidiary company are neither goods nor services. Further, purchase or sale of shares or securities, in itself is neither a supply of goods nor a supply of services. For a transaction/activity to be treated as supply of services, there must be a supply as defined under section 7 of CGST Act. It cannot be said that a service is being provided by the holding company to the subsidiary company, solely on the basis that there is a SAC entry '997171' in the scheme of classification of services mentioning....

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....after referred to as "KGST Act"), hereby clarifies the issues as under. Sl.No. Issue Clarification Taxability of share capital held in subsidiary company by the parent company 1. Whether the activity of holding shares by a holding company of the subsidiary company will be treated as a supply of service or not and whether the same will attract GST or not Securities are considered neither goods nor services in terms of definition of goods under clause (52) of section 2 of KGST Act and the definition of services under clause (102) of the said section. Further, securities include "shares" as per definition of securities under clause (h) of section 2 of Securities Contracts (Regulation) Act, 1956. This implies that the se....