TaxTMI 
TaxTMI 
2024 (2) TMI 910
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....ce tax related matters. During the course of the audit for the financial year 2013-14 and on the scrutiny of the balance sheet and other financial records of the appellant, the officers of the department observed that the appellant had paid an amount of Rs. 5,78,59,139/- during the year 2013-14 as commission on profit to one of the directors namely Shri Alok Kumar Modi. 1.1 The department entertained a view that as per the provisions of Section 65B (44) of the Finance Act, 1994, 'every activity carried out by a person for another person, for some consideration is considered as service' and same is accordingly liable for service tax as per the provisions of the Finance Act, 1994. The exception from this provision has been provided under S....
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....o Para 7.10 of the Impugned order-in-original, where in respect of commission on profit it has been mentioned that there was no employer/employee relationship with respect to commission on profit and therefore the amount paid to Shri Alok Kumar Modi is liable for the service tax. Emphasizing this conclusion the Learned Adjudicating Authority has mentioned that the resolution appointing joint managing director is on temporary basis for four years and therefore he was not a permanent employee, thus it was concluded by the Learned Adjudicating Authority that employee/employer relationship has not been established in this case. Learned Commissioner has also found that the Joint managing Director has received commission on profit which is extra ....
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....so drawn our attention to Section 17(1)(iv) where under the salary has been defined as it includes "any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages". It has thus been emphasized that even the percentage of the profit provided to the joint managing director was a part of the salary and therefore the same in no way destroys the relationship between the appellant and the joint managing director as an employer and employee. The Learned Advocate has also relied on following decisions:- Bengal Beverages 2020 11 TMI 622 TRI KOL Maithan Alloyes 2019 4 TΜΙ 1595 Supreme Traves 2021 5 TMI 832 TRI AHD Supreme Traves Guj High Court order 2023 3 ΤΜΙ 569....
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....yee of the Company and accordingly, 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....