Tax deduction compliance and payee income recognition govern consultancy disallowance, while no exempt income prevents related expenditure disallowanc...
The director's remuneration in the form of commission based on a percentage of the company's total profit is not subject to service tax under the reverse charge mechanism. The amounts paid as salary and the TDS deducted under the salary head are not in dispute. Any amount paid to the director as remuneration, including commission from the company's profit, is not chargeable to service tax under the reverse charge basis, as established in the case of ALCHEMIE ORGANICS VERSUS C.C.E & S.T. -VALSAD [2024 (6) TMI 1413 - CESTAT AHMEDABAD]. The CESTAT clarified that remunerations paid to Managing Directors/Directors, whether whole-time or independent, when compensated for their performance, would not be liable to service tax. Consequently, it is settled law that any commission from the company's profit paid to the director as remuneration is not liable to service tax under the reverse charge basis. The impugned order is unsustainable and is set aside, and the appeals are allowed.
The director's remuneration in the form of commission based on a percentage of the company's total profit is not subject to service tax under the reverse charge mechanism. The amounts paid as salary and the TDS deducted under the salary head are not in dispute. Any amount paid to the director as remuneration, including commission from the company's profit, is not chargeable to service tax under the reverse charge basis, as established in the case of ALCHEMIE ORGANICS VERSUS C.C.E & S.T. -VALSAD [2024 (6) TMI 1413 - CESTAT AHMEDABAD]. The CESTAT clarified that remunerations paid to Managing Directors/Directors, whether whole-time or independent, when compensated for their performance, would not be liable to service tax. Consequently, it is settled law that any commission from the company's profit paid to the director as remuneration is not liable to service tax under the reverse charge basis. The impugned order is unsustainable and is set aside, and the appeals are allowed.
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