SERVICES PROVIDED BY A DIRECTOR OF A COMAPANY

[KESHAV GROVER]

WHETHER SALARY/REMUNERATION PAID TO THE DIRECTORS OF THE COMPANY IN THE NORMAL CIRCUMSTANCES IS LIABLE TO REVERSE CHARGE.

EVERY PRIVATE COMPANY IN THE ORDINARY COURSE OF BUSINESS, GIVES SALARY TO ITS DIRECTORS.

[Rajagopalan Ranganathan]

Sir,

If the relationship between the director and the company is employer-employee relationship then there will be no gst liabilty.

[KASTURI SETHI]

In order to prove employer-employee relationship, only monthly salary on record is not sufficient. The appointment letter of Director must contain clause of 'Hiring and firing'. There are other parameters also. The following case law pertains to Service Tax but it is equally applicable in the present GST regime. It is very very important. The judgment is not lengthy. Read carefully word for for word.

2019 (4) TMI 1537 - CESTAT KOLKATA M/S. BRAHM ALLOY LIMITED VERSUS COMMISSIONER OF CGST & CENTRAL EXCISE, DURGAPUR

[SHARAD ANADA]

2019 (1) TMI 433 - CESTAT MUMBAI M/S ALLIED BLENDERS AND DISTILLERS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, AURANGABAD

 

[KASTURI SETHI]

Dear Sharad Anada Ji, Very useful case law. It is worth saving for future. On the same issue, we can find some case laws pro-revenue and some anti-revenue. Pro-assessee case laws are very very important as posted by you. At the same time, as a precautionary measure, pro-revenue case law should also posted in order to make the visitors of this site aware of the dangers involved. Any how we are to go by the Act. Case laws help us to understand law properly. Thanks for posting this judgement.

[KESHAV GROVER]

THANKS TO ALL FOR SPENDING YOUR PRECIOUS TIME.

[Ganeshan Kalyani]

I agree with Sri Rajagoplan Sir's view stating that if there is employer - employee relationship the GST is applicable on salary /remuneration paid to the Directors of the company.

AI Summary

Employer-employee relationship determines GST liability on director remuneration; where absent, service-tax precedents may indicate taxable services.
GST liability on director remuneration depends on whether a employer-employee relationship exists; mere monthly salary is insufficient to establish that relationship. Evidence such as an appointment letter containing hiring-and-firing authority and other employment parameters is material. Absent an employment relationship, remuneration may be treated as a taxable service, and service-tax precedents-both pro-revenue and pro-assessee-are relied upon in assessing GST treatment.