BST Steels Pvt. Ltd Vs Superintendent of Central Tax
Date: September 26, 2023
Subject Matter
GST under RCM is payable on the guarantee/security provided to a bank by the Managing Director of a company.
Summary
The case concerns the challenge to an order passed by the respondent authorities affirming the liability to pay GST on the guarantee/security provided to a bank by the Managing Director of a company. The petitioner sought exemption from payment of GST on the basis of the personal properties provided as security and personal guarantee. However, the respondent authorities relied on Notification No. 13/2017- Central Tax (Rate) to support the liability to pay GST on reverse charge basis for services supplied by a director to the company or body corporate. The court found that the notification clearly specified the tax liability on such services and upheld the orders of the respondent authorities, rejecting the petitioner's contention.
FULL TEXT OF THE JUDGMENT/ORDER OF TELANGANA HIGH COURT
The present writ petition has been filed assailing the order dated 31.03.2023 passed by the respondent No.3/Additional Commissioner, (Appeals-II) vide Appeal No: 48/2022 (SC) GST, affirming the order dated 18.11.2021 passed by the respondent No. 1/The Superintendent of Central Tax vide ORDER-INORIGINAL NO. 02/2021-22-(GST).
2. Heard Sri Basavaraj Bala Krishna, learned counsel for the petitioner and Sri Dominic Fernandes, learned counsel for the respondent-Department.
3. The point of law in issue was, the non-requirement to pay GST on the guarantee/security to the bank provided by the Managing Director by providing the personal properties as security and personal guarantee. The order of the respondent 1 rejecting the contention of the petitioner was affirmed also by the respondent No.3 in Appeal.
4. Today during the course of hearing, the learned counsel for the respondent-Department had produced the Notification No. 13/2017- Central Tax (Rate) dated 28.06.2017 wherein the Government of India, Ministry of Finance (Department of Revenue) had notified in the table certain categories of supply of services supplied by a person to be leviable of tax on the reverse charge basis. Clause 6 of the said notification for ready reference is reproduced herein under:
Table
| Sl. No. | Category of Supply of Services | Supplier of service | Recipient of Service |
| (1) | (2) | (3) | (4) |
| 6 | Services supplied by a director of a company or a body corporate to the said company or the body corporate. | A director of a company or a body corporate | The company or a body corporate located in the taxable territory. |
5. The petitioner in the instant case is banking on the personal properties provided by the Managing Director as security and personal guarantee provided for the company which seeking exemption from payment of GST.
6. A plain reading of the notification referred to in the preceding paragraphs would clearly give an indication that the Central Government vide the said notification had specifically notified that the services provided by the Director of a company or a body corporate to the said company or said body corporate be leviable of tax on reverse charge basis and in the said event, the company would become liable to pay the tax for the said services. The said notification is also not under challenge and the same still holds good.
7. In the teeth of the said notification, the finding arrived at by the respondent No.1 at the first instance dated 18.11.2021 and the order in original dated 31.03.2023 passed by the respondent No.3 also cannot be said to be in any manner erroneous, arbitrary or bad in law. We also do not find any strong case made out by the petitioner calling for interference with the said impugned order.
8. The writ petition fails and is accordingly rejected. No costs.
As a sequel, miscellaneous petitions, pending if any, shall stand closed.