2026-VIL-1217-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax – Taxability of Corporate Guarantee without Consideration - The Appellant furnished corporate guarantees on behalf of its associated enterprises without charging any monetary consideration, commission, or fees. The Original Authority and Commissioner (Appeals) confirmed a demand of service tax on a notional and assumed amount of commission, contending that the issuance of corporate guarantee amounts to a service taxable under Section 65B(44) and Section 66B of the Finance Act, 1994 - Whether furnishing of corporate guarantee for group companies without any consideration constitutes a 'service' liable to service tax - HELD - Consideration is a critical and essential element for determining whether an activity qualifies as a 'service' under the statutory definition. The statute requires both a 'provider' and a flow of 'consideration' for an activity to be taxable as a service; the absence of either element precludes taxability – The issue has already been conclusively settled by the Hon'ble Supreme Court in the case of Edelweiss Financial Services Ltd, wherein it was held that no service tax should be levied where the assessee has not received any consideration while providing corporate guarantee to group companies - No service tax is payable on corporate guarantees provided without any consideration, as the demand based on assumed or notional benefits cannot override the fundamental requirement of actual consideration in the definition of service - The impugned order is set aside and appeals are allowed
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