M/S. D P JAIN AND CO. INFRASTRUCTURE PVT. LTD., NAGPUR THR. GENERAL MANAGER (ACCOUNTS), SANJAY BOLE vs UNION OF INDIA, THR. THE SECRETARY, MINISTRY OF FINANCE DEPT. OF REVENUE, NEW DELHI AND ORS. — WP/2087/2025

Summary: WP/2087/2025 - M/S. D P JAIN AND CO. INFRASTRUCTURE PVT. LTD. vs. UNION OF INDIA Outcome Petition PARTLY ALLOWED The High Court of Bombay (Nagpur Bench) quashed the show cause notice and GST investigation proceedings against the petitioner company for providing corporate guarantees without consideration. Key Findings What Was Challenged: - Circular No. 204/16/2023 (27.10.2023) declaring corporate guarantees as taxable services - Rule 28(2) of CGST Rules, 2017 (amended 26.10.2023) imposing 1% annual valuation on guarantees - Show cause notice dated 28.01.2025 demanding GST on corporate guarantees Court's Decision: 1. Corporate guarantees provided without consideration are NOT taxable under GST 2. The petitioner explicitly declared in guarantee deeds that no commission/fee was received 3. The activity lacks the essential requirement of "consideration" for taxability 4. Rule 28(2) amendment was NOT declared ultravires (rejected on this ground) Legal Reasoning: - Relied on Supreme Court judgment in *Commissioner of CGST vs. Edelweiss Financial Services Ltd.* (2023), holding that corporate guarantees to group companies without consideration are non-taxable services - For taxability under GST Act, both a "provider" AND "flow of consideration" must exist - Corporate guarantees are contingent contracts enforceable only on default—not commercial services Relief Granted: - ✅ Show cause notice (02/2025-GST) quashed - ✅ GST Intelligence summons (20.07.2023) quashed - ❌ Challenge to Rule 28(2) validity rejected This case analysis is maintained by casestatus.in based on publicly available court records.