High Court Decision : Managing Director's Bank Security Now Under GST Reverse Charge

• The writ petition challenges an order from the respondent No. 3, dated March 31, 2023, which upheld an earlier order from the respondent No. 1, dated November 18, 2021.

• The issue at hand is whether GST needs to be paid on a bank guarantee/security provided to a bank by the Managing Director, using personal properties and personal guarantee.

• The respondent No. 1 rejected the petitioner's argument, and this decision was upheld by the respondent No. 3 in an appeal.

• During the hearing, the respondent-Department's counsel presented Notification No. 13/2017, dated June 28, 2017. This notification specifies that services provided by a director of a company or body corporate to that company or body corporate are subject to tax under the reverse charge mechanism.

• The petitioner seeks exemption from paying GST based on the personal properties and personal guarantee provided by the Managing Director for the company.

• The notification clearly states that services provided by a director to a company or body corporate are subject to reverse charge tax, and this notification is still valid and not under challenge.

• In light of the notification, the orders of the respondent No. 1 and respondent No. 3 cannot be considered erroneous or unlawful. There's no strong case for the petitioner to challenge these orders.

• The writ petition is rejected without any costs, and any pending miscellaneous petitions are closed as a result. BST Steels (P.) Ltd. vs. Superintendent of Central Tax