While the pre-negative list service tax era decisions stand on a different footing, inability to tax in the absence of consideration in the negative list era prior to the GST regime provided a silver lining. Unlike service tax, Schedule I under the CGST Act, 2017 explicitly brings supply of services between related parties (even without consideration) under the tax net.
Further, Section 7 ibid defined the term "supply" widely. While invocation of a corporate guarantee is contingent, can the provision of a corporate guarantee be termed as contingent since the entity (on whose behalf such guarantee is extended) immediately stands to benefit by sanction of credit facilities?
That being said, 200+ circulars have been issued to clarify numerous aspects of GST law within seven years of its promulgation, under the refuge of ensuring uniformity in implementation. This speaks volumes about the Executive enforcing its interpretation on laws drafted by the Legislature which should ideally be done by the judiciary. Nevertheless, it will be interesting to watch how jurisprudence unfolds on this litigation!