TaxTMI 
TaxTMI 
2026 (8) TMI 929
X X X X Extracts X X X X
X X X X Extracts X X X X
...., whereby the learned Commissioner has dropped the demand raised in the show cause notice dated 02.06.2017. 2. Briefly the facts of the present case are that the respondent is registered for providing the following taxable services specified under Section 65(105) of Finance Act, 1994 as amended up to 30.06.2012 and under Section 65B (44) with (effect from 01.07.2012 onward) and is availing the CENAVT credit under CENVAT Credit Rules, 2004. An audit of the respondent was conducted and during the audit on scrutiny of balance sheet and other relevant documents for the period 2011-12 to 2014-15, it was noticed that the respondent was not paying service tax under the Banking and Other Financial services for providing Corporate guarantees to b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....esponsible for completing the duties and obligations of debtor to lender, in case the debtor fail to comply with the terms of the debtor-lender contract. He further submits that the adjudicating authority has erred in his conclusion that Bank guarantees and corporate guarantees are not alike. He further submits that the service tax is chargeable on the commission receivable on corporate guarantee given by the respondent under Banking and Other Financial Services as the respondent has borne a certain cost by providing a corporate guarantee on behalf of their associates enterprises. 5. On the other hand, the learned Counsel appearing on behalf the respondent supported the impugned order stating that there is no infirmity in the impugned or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....te Vs. M/s Pharmax Corporation Limited vide the Final Order NO. 55453/2024 dated 27.03.2024 has clarified that ruling pronounced in M/s Olam Agro India Ltd. (cited Supra) has no effect because no consideration is charged. Accordingly, no service tax is liable to be imposed in the absence of consideration. He further relied upon the decision of Principal Bench, New Delhi in the case of M/s Sowar Pvt. Ltd. vs. Commissioner of Service Tax, Delhi-II vide the Final Order No. 50607/2023 dated 29.03.2023, wherein, it has been held that corporate guarantee to associates without consideration are not taxable under Section 66B. He further submits that corporate guarantee obligation arises only on bank demand akin to transaction in money for single in....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the respondent to its associated enterprises without any consideration whatsoever, we find that this issue has been settled in series of decisions by the Hon'ble Apex Court as well as by the various courts relied upon by the respondent (cited Supra). We also find that the decision relied upon by the appellant in the case of M/s Olam Agro India (cited Supra) is not applicable in the present case because the consideration for extending the guarantee was there whereas, in the present case, admittedly respondent has not charged any consideration whatsoever from its related parties. 7. We find that the Principal Bench of the Tribunal, New Delhi in the case of Central Excise & Service Tax, Delhi South Commissionerate Vs. M/s Pharmax Corporati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ioner. 10. We have gone through the two case laws relied upon by the learned authorized representative. It is being explicitly recorded in Kaveri Agricare that the "demand is on account of consideration received by the appellant for providing the above corporate guarantee during the material period". Similarly, in the case of Olam Agro it is recorded "a show cause notice dated 03.04.2012 was issued covering the period October 2010 to 31.12.2011 proposing levy of service tax, interest and penalties for corporate guarantee commission remitted by the petitioner to the signatory entity and agency commission remitted for service provided by agents in respect of the export business of the petitioner". Thus, in both cases, a commission or....