GstJustice G.R. Swaminathan noted that the Assessing Officer did not address or even refer to these circulars while passing the impugned order. The court observed that under well-settled principles of administrative law, failure to consider a specific

by Sekar Reporter · October 31, 2025

Top Home »Top Stories »GST on Corporate… GST on Corporate Guarantee: Madras HC Quashes Order for Non-Consideration of CBIC Circulars, Remands to AO [Read Order] While quashing the order on this limited ground, the HC remanded the matter back to the AO with directions to reconsider the petitioner’s submissions in light of both CBIC circulars. By – Navasree A.M | 30 Oct 2025 11:15 AM In a matter of the levy of Goods and Services Tax ( GST ) on corporate guarantees, the Madurai Bench of the Madras High Court has set aside an assessment order passed holding that the authority failed to consider the relevant CBIC Circulars clarifying valuation rules under the CGST Act. The petitioner, M/s. Shri Amman Steel and Allied Industries Private Limited, who had furnished a corporate guarantee in favour of a related company, contended that no consideration was received for such guarantee and that the recipient entity was eligible for full Input Tax Credit (ITC). When GST Disputes Knock—Answer with the Gavel! Click here Despite these submissions, the State Tax Officer (Roving Squad), Trichy, levied GST at 1% of the guarantee value, treating it as a taxable supply between related parties under Rule 28(2) of the CGST Rules, 2017. In its defense, the assessee relied upon CBIC Circular No. 199/11/2023-GST dated 17.07.2023 and Circular No. 210/4/2024-GST dated 26.06.2024, which clarified the valuation of corporate guarantee transactions and the deemed value provisions under Rule 28. Law in Your Hands — GST, Explained & Up to Date! Click here These circulars provide that where the recipient is eligible for full ITC and the transaction value is declared as nil or zero, the value shown in the invoice (or the declared value) shall be deemed to be the open market value, avoiding any notional valuation for tax purposes. Also read: CBIC notifies Assignment of Proper Officers for GST Proceedings u/s 74A,75(2) and 122 [Read Circular] However, Justice G.R. Swaminathan noted that the Assessing Officer did not address or even refer to these circulars while passing the impugned order. The court observed that under well-settled principles of administrative law, failure to consider a specific defense raised by the assessee renders the order legally vulnerable. While quashing the order on this limited ground, the High Court remanded the matter back to the Assessing Officer with directions to reconsider the petitioner’s submissions in light of both CBIC circulars and pass a fresh order on merits and in accordance with law after granting due opportunity of hearing. The Court clarified that it had not entered into the merits of the levy itself, confining its ruling to the procedural infirmity arising from non-consideration of the assessee’s defense. The writ petition was accordingly allowed. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates Subscribe Taxscan Premium to view the Judgment Navasree A.M Navasree A M, B.B.A., LL.B. (Hons), a lawyer with over 2.5 years of experience as a researcher and content writer at Taxscan, specializing in Indirect Taxes and Corporate Laws. Justice G.R. Swaminathan CBIC Madras High Court Related Stories Kerala HC Stays Collection of GST on Health Insurance Premiums for Union Bank Retirees [Read Order] 31 Oct 2025 6:33 AM Anticipatory Bail Maintainable for CGST Offences: Delhi HC Allows Petitioner to Seek Relief u/s 438… 30 Oct 2025 9:30 PM Writ Petition Not Maintainable Against GST Demand When Appeal Remedy Exists: Delhi HC Dismisses Tata… 30 Oct 2025 9:00 PM Transfer of Leasehold Rights Not Taxable under GST: Gujarat HC Quashes SCN Issued to KP Green… 30 Oct 2025 8:30 PM Punjab & Haryana HC Dismisses 23 Years Old Income Tax Appeals Due to Inactive Prosecution & Low Tax… 30 Oct 2025 8:00 PM Unexplained Cash Deposits and Status of Resident Not Verified on Merits: ITAT Remands ₹1.17 Crore… 30 Oct 2025 7:30 PM Restaurant Services Provided in Non-Air-Conditioned Premises Remain Exempt under Mega Exemption… 30 Oct 2025 7:00 PM Rent to Foreign Government Office Taxable Without MEA Certificate: CESTAT Confirms Service Tax… 30 Oct 2025 6:30 PM CAs seek Transfer Pricing Audit, ITR Deadline Extension after Audit ITR gets Extended by CBDT 30 Oct 2025 6:04 PM DGFT notifies Fee Refund Procedure for Cancelled Gold Bullion TRQ Applications under India-UAE CEPA 30 Oct 2025 6:00 PM CLAT Law Entrance Overhaul: Advisory Board of the Consortium of NLUs forms Expert Committee, invites… 30 Oct 2025 5:51 PM ICAI to Declare CA Final, Intermediate & Foundation September 2025 Exam Results on this Date! Check… 30 Oct 2025 5:30 PM Quick Links Top Stories News Updates Columns Interviews CST & VAT / GST Corporate Laws Other Taxations Events Scan Income Tax Service Tax Excise & Customs International Taxation Domestic Taxation Firms Scan Job Scan Archive Sitemap Know More About Us Careers Advertise Privacy Policy Terms and Conditions Contact Us Get news delivered to your in-box. Subscribe to our newsletter. © 2025 Taxscan. All rights reserved. Powered by Blink CMS Login My Profile Subscribe Now Kerala HC Stays Collection of GST on Health Insurance Premiums for Union Bank Retirees [Red Order]