Appeal to be preferred in case of Order demanding penalty u/s 78A on director

[Bishan Shah]

Order issued to the company demanding service tax along with Interest and Penalty. Penalty is also imposed on the directors. In this case the appeal has been preferred by the company. Whether Director is also required to prefer appeal in the above matter?

[KASTURI SETHI]

Was SCN issued to Director separately or not ? In the SCN, was Director also called upon to explain why penalty should not be imposed upon him ? Pl.confirm.

[Bishan Shah]

In SCN issued to Company; in that SCN penalty to director is mentioned and SCN and OIO both issued to the company as well as director.

[KASTURI SETHI]

Penalty can be imposed upon Director only if mala fide intent to evade tax is present/ established. In other words, if Director is instrumental in evasion of tax.. Go through this case law carefully and word for word. This can help you.

2021 (9) TMI 1247 - CESTAT NEW DELHI MANJEET KAUR BANSAL Versus COMMISSIONER OF SERVICE TAX/GST, UDAIPUR

[KASTURI SETHI]

As per EXCUS, this judgement has not been challenged by the department.

[KASTURI SETHI]

2023 (2) TMI 772 - CESTAT AHMEDABAD K.J. GUPTA Versus COMMISSIONER OF C. EX. & SERVICE TAX, VADODARA-I

[Padmanathan KV]

Dear querist,

The Director has to file a separate appeal.

[KASTURI SETHI]

Yes. Despatch no. on SCN and Order No. on Order-in-Original meant for Company and Director are separately addressed.

[Bishan Shah]

Thank you so much to both the experts.

AI Summary

Separate appeal by director required where a penalty is imposed on him; liability depends on mala fide tax evasion intent.
A director is required to file a separate appeal where a show-cause notice and Order-in-Original impose a penalty on him; imposition of such penalty depends on establishment of mala fide intent or that the director was instrumental in tax evasion, and separate dispatch/order particulars for company and director indicate distinct proceedings.