TaxTMI 
TaxTMI 
2024 (9) TMI 700
X X X X Extracts X X X X
X X X X Extracts X X X X
....terest and penalty and on the reversal of cenvat credit amount on the input service attributed to the exempted service provided by them in the state of Jammu & Kashmir with penalty and interest. 2. The appellant is a coaching institute having centralized registration under "Commercial Coaching" and "Renting of Immovable Property" Service. On the basis of internal audit of the records conducted for the financial years 2012-13 and 2013-14, it was found that the appellant has wrongly availed the cenvat credit of Rs.3,95,072/- as the same related to the exempted services provided by the appellant in the state of Jammu & Kashmir. The appellant vide journal voucher dated 18.05.2016 during the course of audit itself reversed the cenvat credit amo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red under the provisions of Reverse Charge Mechanism [RCM] in terms of Notification No.30/2012-ST dated 20.06.2012. The RCM provided under Section 68(2) of Finance Act, 1994 read with Notification No.30/2012-ST only covers services provided by directors of the company in such capacity only. The service tax, if any, payable is to be paid by the director only and not by the appellant. 6. Payment to directors under dispute is actually towards 'office rent' in the audited Profit & Loss account evidencing the correct nature of expense. Building given on rent cannot be a director's service but a renting service provided by a person, who also happens to be a director. Hence, liability to pay service tax shall arise on the director himself and not....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the directors. Secondly, in that case the director had obtained service tax registration for "renting of immovable property", which in the present case has not been taken. The learned Authorised Representative emphasized that in the present case, the director had not paid the service tax on the amount of rent received and hence, no benefit can be granted in the terms of the decision in Cords Cable Industries Ltd. 10. The short question to be considered is whether the service tax can be levied under the RCM on the appellants, when the service of renting of immovable property provided by the directors was in their individual capacity and not as the director of the company. 11. Firstly, dealing with the issue on merits, it is the settled p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... directors is in the nature of office rent as shown in the audited Profit & Loss Account. This clearly relates to the fact that the service provided by the director is not as directors as renting of the building on rent does not fall under the director's service. It is a matter of chance that the renting service provided by a person happens to be a director. If the liability towards the services rendered by a person in his individual capacity is fastened on the company where he is a director, it would lead to extending the unwarranted liability on the company. The intention of the government is not that any activity/service which is performed by the director, the company would be liable to pay the tax. 13. The Circular No.201/13/2023-GST d....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that company or body corporate shall be taxable under RCM in the hands of the company or body corporate under notification no.13/2017-CTR (SL.No.6) dated 28.06.2017." 14. The Circular clarifies and distinguishes the applicability of service tax on the company only when the services have been provided by way of "renting of immovable property" in the company by the directors in their capacity as directors and not in their personal capacity. 15. We find that in identical situation, this Tribunal in the case of Cords Cable Industries Ltd. considered the issue of payment of service tax under RCM and observed that the directors in that case were providing service of "renting of immovable property" not as directors of the appellant company but....
X X X X Extracts X X X X
X X X X Extracts X X X X
....claimed for the exempted services provided in the State of Jammu & Kashmir on the ground that the amount of cenvat credit so taken was reversed before the issuance of the show cause notice and hence, it is not a case of service tax being short paid by reason of fraud or collusion or wilfulful mis-statement or suppression of facts. Both the Authorities below have upheld the imposition of penalty as at the time of audit of the records of the appellant company, the cenvat credit was not reversed and if the audit had not taken place, the appellant would not have reversed the said amount. 18. We find that the amount of cenvat credit taken by the appellant on the exempted services was in contravention of the provisions of the Finance Act and the....