Company Not Liable for Service Tax on Director Rentals, Faces Penalty for CENVAT Credit Misuse and Interest for Delays.

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....The case pertains to the levy of service tax under the reverse charge mechanism (RCM) on rental payments made by a company to its directors for renting immovable property. The key points are: 1) The service of renting immovable property provided by the directors was in their individual capacity, not as directors of the company. 2) Imposing service tax liability under RCM on the company for services rendered by directors in their individual capacity would lead to unwarranted liability. 3) Following the Cords Cable Industries Ltd. case, the Tribunal held that the company cannot be saddled with service tax liability under RCM when the service of renting immovable property was provided by directors in their personal capacity, not as directors. .........