Whether service tax leviable on remuneration paid to Directors in addition to salary

[samiuddin ansari]

Hello....Good evening Sir,

My friends Company engaged in manufacture of Ball and Bearing and accordingly registered with Central Excise. Now, CGST Audit people, at the time of conducting audit, raised an observation and demanded service tax on remuneration paid to all the Directors of the Company holding that the remuneration is not a salary since professional tax as per Gujarat Professional Tax Act, no professional tax had been deducted from the amount paid to them. Considering only such aspect, they raised an objection and instructed to pay with interest and penalty. Please throw light on such matter and guide as to whether service tax is leviable on such amount as this is not a commission or special charges or any kind fees paid to them.

AI Summary

Service Tax Not Applicable on Director Remuneration in Employee-Employer Relationship Per Section 65 B (44) (b) of Finance Act 1994. A company engaged in manufacturing faced a service tax demand during a CGST audit concerning remuneration paid to its directors, which was not subject to professional tax. The auditors argued this remuneration was not salary. Respondents in the forum clarified that if the director-company relationship is employee-employer, service tax is not applicable under Section 65 B (44) (b) of the Finance Act, 1994, as services provided by an employee to an employer are exempt. Non-payment of professional tax does not alter this exemption. All respondents agreed that service tax is not applicable in this scenario.