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Personal Guarantee by Director is Taxable under GST: Hon'ble Telangana HC

Hon'ble Telangana HC in the case of M/s BST Steel (Writ Petition No. 21384 of 2023) dated 27.09.2023 has held that there is no infirmity in the decision of appellate authority i.e. Additional Commissioner (Appeals) in upholding the Taxability of Service by the Directors in the form of Personal Guarantees under RCM. (Copy of Order is also attached in the last)

Accordingly, Taxability of Personal Guarantee by the Directors has been upheld by the Hon'ble Telangana High Court.

Key Observations of the HC (Simplified Form)

The point of law in issue was, the non-requirement to pay GST on the guarantee/security to the bank provided by the Managing Director by providing the personal properties as security and personal guarantee. The Adjudication order of the Superintendent rejecting the contention of the petitioner was affirmed also by the Additional Commissioner in Appeal.

Relevant Extract of the Notification:


Sl. No.

Category of Supply of Services

Supplier of service

Recipient of Service






Services supplied by a director of a company or a body corporate to the said company or the body corporate.

A director of a company or a body corporate

The company or a body corporate located in the taxable territory.

The petitioner in the instant case is banking on the personal properties provided by the Managing Director as security and personal guarantee provided for the company which seeking exemption from payment of GST.

A plain reading of the notification referred to in the preceding paragraphs would clearly give an indication that the Central Government vide the said notification had specifically notified that the services provided by the Director of a company or a body corporate to the said company or said body corporate be leviable of tax on reverse charge basis and in the said event, the company would become liable to pay the tax for the said services. The said notification is also not under challenge and the same still holds good.

In the teeth of the said notification, the finding arrived at by the Superintendent at the first instance dated 18.11.2021 and the order in original dated 31.03.2023 passed by the Additional Commissioner also cannot be said to be in any manner erroneous, arbitrary or bad in law. We also do not find any strong case made out by the petitioner calling for interference with the said impugned order.

The writ petition fails and is accordingly rejected. No costs.

Copy of the Order

Download PDF • 116KB

Disclaimer: We did interpretation of Hon’ble High Court Decision for purely academic purpose. In case, there is any mistake in understanding of the order, we are apologised to the Hon'ble High Court.

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