TaxTMI 
TaxTMI 
2020 (11) TMI 622
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....d from 2012-13 to 2015-16, along with interest and penalty out of the total demand of Rs. 5,67,30,450/-, as proposed in the Show Cause Notice dated 31st October 2017. 2. Briefly stated, the facts of the case are that the Appellant is engaged in the manufacture of Aerated water and fruit pulp or juice-based drinks, classifiable under Chapter No. 2202 of the Central Excise Tariff Act, 1985 on which central excise duty was being paid. In the course of business, the assessee company pays remuneration to its whole-time Directors which has fixed as well as variable component. The said variable component comprised of commission payable on the basis of percentage of profit in conformity with the provisions of the Companies Act. The Department ha....
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....on of tax at source (TDS) under Section 192 of the Income-tax Act, 1961, the provision as applicable to deduction of income-tax on employees. He also submitted Form no. 26AS Traces Statement issued by the Income Tax Deptt., wherein the details of TDS for the said whole-time Directors evidencing deposit of TDS as 'salaries'. He vehemently argued that when the Ld. Adjudicating authority has already held that the Directors are employees of the company and dropped a part of demand on the above ground, then confirmation of the balance demand on the ground that the Directors have provided services to the Appellant company cannot survive, as it is contradictory and unreasonable. The Ld. CA also submitted that the very definition of 'service' under....
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....x. The decision in case of PCM Cement Concrete Pvt. Ltd. (supra) has set the legal proposition that consideration paid to whole-time directors would be treated as payment of salaries inasmuch as there would be employer-employee relationships and in such case the levy of service tax cannot be sustained. 8. In view of the above discussions and the settled legal judicial precedence and provisions contained in statutes referred to above, demand of service tax on remuneration paid to whole-time directors cannot be sustained and hence set aside. Since demand of service tax is set aside, penalty and interest are also not sustainable." 4. He also relies upon the judgment of the ALLIED BLENDERS AND DISTILLERS PVT. LTD. versus C.C.E. & S.....
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.... consultancy or advisory function. The Ld. Consultant also referred to the relevant provisions contained in the Companies Act and the Income Tax Act pertaining to whole-time Directors and applicability of TDS on employees respectively. It is his submission that the entire paymen made to the whole-time Directors and other Directors are duly disclosed in the balance sheet and necessary compliance is being made by filing returns with the ROC under the Companies Act and therefore, there is no question of any fraud or suppression and hence, no penalty is imposable. 6. The Ld. Departmental Representative (DR), Shri K.Chowdhury, while supporting the impugned order passed by the Commissioner, reiterated the findings made therein. He stated that ....
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....rdingly, whatever remuneration is being paid in conformity with the provisions of the Companies Act, is pursuant to employer-employee relationship and the mere fact that the whole-time Director is compensated by way of variable pay will not in any manner alter or dilute the position of employer-employee status between the company assessee and the whole-time Director. We are thoroughly convinced that when the very provisions of the Companies Act make whole-time director (as also in capacity of key managerial personnel) responsible for any default/offences, it leads to the conclusion that those directors are employees of the assessee company. 9. Further, the judgment of this Tribunal in the case of MAITHAN ALLOYS LTD Versus COMMISSIONER OF....