Case Details: Principal Commissioner of Central Tax, New Delhi vs. Sindhu Trade Linkers (2025) 35 Centax 294 (Tri.-Del)
Judiciary and Counsel Details
- Justice Dilip Gupta, President & P. V. Subba Rao, Member (T)
- Shri S.K. Meena, Authorised Representative, for the Appellant.
- Ms Swati Bhardwaj, Advocate, for the Respondent.
Facts of the Case
The appellant challenged the levy of Service Tax on corporate guarantees provided to financial institutions for the grant of loans to its subsidiary units for the period from April 2012 to March 2015. It was contended that the guarantees were furnished without any consideration and, therefore, could not be classified as a taxable service under the category of Banking and Other Financial Services. The matter was accordingly placed before the CESTAT.
CESTAT Held
The CESTAT held that corporate guarantees extended to financial institutions for loans to subsidiary units without any consideration do not constitute a taxable service under Section 65 of the Finance Act, 1994. Since no consideration was received by the appellant, the guarantees cannot be treated as a service liable to Service Tax. The Tribunal noted that levying Service Tax in such a situation is not sustainable; therefore, the appeal filed by the Revenue was dismissed. The order confirms that gratuitous corporate guarantees to subsidiaries do not attract Service Tax.
List of Cases Cited
- Commissioner v. Edelweiss Financial Services Ltd. — (2023) 5 Centax 58 (S.C.) = 2023 (73) G.S.T.L. 4 (S.C.) — Followed [Paras 6, 7]
- Delhi Chit Fund Association v. Union of India — 2013 (30) S.T.R. 347 (Del.) — Followed [Para 4]
- Union of India v. Delhi Chit Fund Association — 2015 (38) S.T.R. J202 (S.C.) — Followed [Paras 4, 7]
