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

Directors Must File Separate Appeals if Named in Tax Orders; Intent to Evade Tax Requires Proof A company received an order demanding service tax, interest, and penalties, including penalties on its directors. The company has appealed the order, and the question arises whether the director should also file a separate appeal. It was clarified that if the director was specifically named in the Show Cause Notice (SCN) and Order-in-Original (OIO), they must file a separate appeal. It was noted that penalties on directors require proof of intent to evade tax. References to relevant case law were provided to support this view. The discussion concluded with a consensus that the director should appeal separately.