# Gujarat HC upholds GST on corporate guarantees, strikes down higher clause 2026-08-17T09:07:09+00:00 | Governance | Indian Opinion Desk Corroboration: 1 independent outlet The Gujarat High Court on August 14 upheld the levy of GST on corporate guarantees given by parent companies to their subsidiaries, ruling that such guarantees fall within the taxable ambit of the CGST Act even when no fee is charged. A division bench of Justices A.S. Supehia and Vaibhavi D. Nanavati delivered the verdict in Torrent Power Ltd. v. Union of India & Ors., rejecting arguments that the earlier service tax regime's precedent should apply. However, the court struck down the requirement to pay tax on whichever is higher among 1% of the guarantee amount or the actual consideration, calling that formula arbitrary. The 1% valuation mechanism under Rule 28(2) survives, but the government cannot automatically demand the higher of the two values where an actual charge exists. The court also ruled that the 1% valuation rule cannot apply retrospectively to periods before October 26, 2023, when it was introduced, providing relief to companies facing demands on older guarantees dating back to the pre-GST era. ## Coverage - cfo.economictimes.indiatimes.com This story was synthesised by AI from the source linked above. Tags: CBIC, GST, Gujarat High Court, Torrent Power, Union of India Canonical: https://indianopinion.org/gujarat-hc-upholds-gst-on-corporate-guarantees-strikes-down-higher-clause/ License: Summary and commentary (c) Indian Opinion, reusable with attribution. Facts belong to the linked sources. Cite: https://indianopinion.org/gujarat-hc-upholds-gst-on-corporate-guarantees-strikes-down-higher-clause/#story-in-brief Review state: restored archive article, accurate at time of publication, not offered to search indexes. How this brief was made: an AI model read the report linked above and wrote this summary and analysis, which were published automatically. Published briefs are sampled every hour by an automated quality check; the editor verifies its findings and approves corrections, and corrected briefs carry a dated correction line. We do no original reporting. Methodology: https://indianopinion.org/ai-use-policy/