Appeal allowed: Managing Director's salary not taxable services under Central Excise Act

The Member (Judicial) allowed the appeal, setting aside the decision that rejected a part of the refund claim as time-barred under Section 11B of the Central Excise Act. It was held that the Managing Director's salary did not constitute taxable services, as it was part of the employer-employee relationship. Relying on the judgment in Parijat Construction, the Member concluded that Section 11B did not apply in this case. The appeal was allowed with consequential relief, as the service tax liability did not arise from the nature of payments to the Managing Director.

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Issues:
Refund claim filed beyond the period of limitation under Section 11B of the Central Excise Act, 1944.

Analysis:
The appellant filed a refund claim for erroneously paid service tax during July 2012 to December 2015 on amounts disbursed to the Managing Director as salary. The adjudicating authority partially allowed the refund claim but rejected a part of it as time-barred under Section 11B. The first appellate authority upheld the decision. The appellant argued that the services rendered by the Managing Director to the company were not taxable services but part of the employment relationship. The appellant relied on the judgment in the case of Parijat Construction to support this argument.

The Departmental Representative contended that the provisions of Section 11B were applicable as per the judgment in the case of Andrew Telecom (I) Pvt. Ltd. The main issue was whether the refund claim was time-barred under Section 11B(1) of the Central Excise Act, 1944. The Member (Judicial) analyzed the submissions and found that the authorities erred in rejecting the refund claim as time-barred. The Member noted that the Managing Director's salary did not constitute a taxable service due to the employer-employee relationship. Citing the judgment in Parijat Construction, the Member concluded that Section 11B did not apply in such cases.

The Member referred to the judgment in Parijat Construction, emphasizing that the limitation under Section 11B does not apply to a refund claimed for service tax paid under a mistake of law. Since the issue was settled by the jurisdictional High Court in favor of the assessee, the Member set aside the impugned order and allowed the appeal with consequential relief. The decision was based on the principle that the service tax liability did not arise due to the nature of the payments to the Managing Director.

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