Is Corporate Guarantee given by Parent Company for Subsidiaries a ‘Supply’ under GST? Bombay HC to hear ₹870 Cr Stake matter [Read Order]
The High Court was apprised of a similar issue which was presented before a Division Bench in January 2025.
![Is Corporate Guarantee given by Parent Company for Subsidiaries a ‘Supply’ under GST? Bombay HC to hear ₹870 Cr Stake matter [Read Order]](https://images.taxscan.in/h-upload/2026/01/21/2121204-is-corporate-guarantee-given-parent-company-subsidiaries-taxscan.webp "Is Corporate Guarantee given by Parent Company for Subsidiaries a ‘Supply’ under GST? Bombay HC to hear ₹870 Cr Stake matter [Read Order]")
The Bombay High Court recently directed the listing of a matter regarding whether the issuance of corporate guarantees by a parent company on behalf of its subsidiaries constitutes a ‘supply of service’ under the Central Goods and Services Tax Act, 2017 (CGST Act). Atlanta Infra Assets Ltd, had lodged two writ petitions before the High Court assailing Order-in-Original passed...
The Bombay High Court recently directed the listing of a matter regarding whether the issuance of corporate guarantees by a parent company on behalf of its subsidiaries constitutes a ‘supply of service’ under the Central Goods and Services Tax Act, 2017 (CGST Act).
Atlanta Infra Assets Ltd, had lodged two writ petitions before the High Court assailing Order-in-Original passed by the GST Authorities where the primary issue was whether corporate guarantees worth a cumulative ₹870 crore: ₹700 crore extended to Mora Tollways Ltd and ₹170 crore to Atlanta Ropar Tollways Pvt. Ltd. could be considered a supply of service under the Act.
The petitioner, represented by Bharat Raichandani and Pritesh Kumar challenged the Revenue’s determination treating such corporate guarantees as taxable supplies.
Government Pleaders Jyoti Chavan and Amar Mishra represented the Revenue.
The petitioner counsel placed reliance on an earlier order of the Bombay High Court in Schloss HMA Pvt. Ltd. v. Union of India (2025), which concerned the same issue.
In the above case, a Bench comprising Justice B.P. Colabawalla and Justice Firdosh P. Pooniwalla by an order dated 8 January 2025 was met with a challenge to the validity of Rule 28(2) of the CGST Rules and impugned notifications dated 27 October 2023 and 11 July 2024, citing them to be arbitrary and passed without the authority of law and violative of Articles 14 and 265 of the Constitution of India.
The petitioner sought a declaration that providing corporate guarantees to group companies is not a supply under Section 7 of the CGST Act and hence not leviable to tax under Section 9.
The Division Bench in Schloss HMA noted that the issue required deeper examination, including whether the guarantee constitutes an intra-state or inter-state supply under GST law and proceeded to grant the petitioners interim protection by staying the operation of the adjudication order and show cause notice
However, the matter is yet to reach finality owing to multiple adjournments and procedural matters.
During preliminary hearing in the present case, the Division Bench comprising Justice G.S. Kulkarni and Justice Aarti Sathe noted that the “short issue” before the Court was regarding whether the provision of providing corporate guarantees for subsidiaries amounts to a supply under GST law.
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Noting that there are a number of petitions regarding similar issues and affidavits have been filed in some, the Bench adjourned the proceedings to 16th February 2026, at 3.00 p.m. to be listed along with companion matters.
The Bench further directed that, in the event any coercive action is intended to be taken against the Petitioner, a clear notice of seven days shall be given to the Petitioner.
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