- The High Court ruled that corporate guarantees issued by a holding/group company to banks without any consideration do not constitute a taxable supply of service under the CGST Act, 2017.
- The court emphasized that “consideration” is an essential ingredient of “supply” under Section 7 of the CGST Act, and without it, GST cannot be levied, even between related parties.
- This decision provides significant relief to group companies and questions the validity of departmental circulars that attempt to expand the scope of taxable supply beyond the statute.
Source Darda Advisors
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