TaxTMI 
TaxTMI 
2024 (10) TMI 1342
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.... Ratnamani Metals & Tubes Ltd. v. CCE & ST- Ahmedabad- III 2024 (3) TMI 10-CESTAT AHMEDABAD Supreme Treves Pvt. Ltd. v. CCE & ST 2024 (1) TMI 935-CESTAT AHMEDABAD Gujarat Guardian Ltd. v. CCE, Bharuch 2024 (2) TMI 910- CESTAT AHMEDABAD M/s. Maithan Alloys Ltd. v. CCE & ST, Bolpur 2019 (4) TMI 1595- CESTAT KOLKATA M/s. Allied Blenders & Distillers Pvt. Ltd. v. CCE & ST, Aurangabad 2019 (1) TMI 433-CESTAT-MUM M/s. Rent Works India Pvt. Ltd. v. CCE. Mumbai V 2016 (5) TMI 786- CESTAT MUMBAI Alchemic Organics v. C.C.E. & S.T.- Valsad CESTAT Ahmedabad He also relied upon the recent judgment of this Tribunal in the case of Alchemie Organics Final order No.11348-11349/2024 dated 05.06.2024. 3. Shri Anoop Kumar Mudvel, Learned Superintendent (AR) appearing on behalf of the Revenue, reiterates the findings of the impugned order. 4. We have carefully considered the submissions made by both the sides and perused the records. We find that the limited issue to be decided is that whether the payment made to the directors in the form of commission which is a part of the profit of the company is liable to service tax or otherwise.....
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....hin the definition of 'service' prescribed under Section 65B(44) of the Finance Act, 1994. 6. In the negative list Service Tax regime brought into effect from 1-7-2012, service has been defined under Section 65B(44) read as follows: - SECTION 65B. Interpretations. - In this Chapter, unless the context otherwise requires, - (44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include - (a) an activity which constitutes merely, - (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Constitution, or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. 7. The appellants are taking shelter of clause (b) of the definition of 'service'.....
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....ent with him in such terms and conditions as they may deem fit. Also, the appointed Directors could be removed from their post by the Appellant company as per clause 94 of the Articles of Association which is mentioned as below : 94. Removal of Director. - The Company may by an ordinary resolution remove any Director (not being a Director appointed by the Tribunal in pursuance of Section 242 of the Act) in accordance with the provisions of Section 169 of the Act. A Director so removed shall not be re-appointed a Director by the Board of Directors. 9. All the four Directors were appointed by the resolutions passed by the Board of Directors (BOD). The resolution for Mr. Chabria is as below : Similar resolutions have been passed by the BOD for other Director also. 10. We find that the appellant have placed on record the Form-16 issued by the appellant indicating deduction of income tax at source on the salary paid to each of the Directors. Besides, the appellant had also produced the contribution made to the Employees Provident Fund for each of the Directors, as required in case of other employees under the relevant laws. The stateme....
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....supervision of his master. An agent, on the other hand, in the exercise of his work is not subject to the direct control or supervision of the principal, though he is bound to exercise his authority in accordance with all lawful orders and instructions which may be given to him from time to time by his principal. But this test is not universal in its application and does not determine in every case, having regard to the nature of employment, that he is a servant. A doctor may be employed as a medical officer and though no control is exercised over him in respect of the manner he should do the work nor in respect of the day to day work, he is required to do, he may nonetheless be a servant if his employment creates a relationship of master and servant. Similar is the case of a chauffeur who is employed to drive the car for his employer. If he is to take the employer or any other person at his request from place 'A' to place 'B' the employer does not supervise the manner in which he drives between those places. Such examples can be multiplied. A person who is engaged to manage a business may be a servant or an agent according to the nature of his service and the authority of his empl....
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.... of the company and not a servant. The control which the company exercises over the assessee need not necessarily be one which tells him what to do from day to day. That would be a too narrow view of the test to determine the character of the employment. Nor does supervision imply that it should be a continuous exercise of the power to oversee or superintend the work to be crone. The control and supervision is exercised and is exercisable in terms of the articles of association by the Board of Directors and the company in its general meeting. As a Managing Director he functions also as a member of the Board of Directors whose collective decisions he has to carry out in terms of the articles of association and he can do nothing which he is not permitted to do. Under s. 17(2) of the Indian Companies Act 1913 Regulation No. 71 of Table A which enjoins that the business of the company shall be managed by the directors is deemed to be continued in the articles of association of the company in identical term or to the same effect. Since the Board of Directors are to manage the business of the Company they have every right to control and supervise the assessee's work whenever they deem it....
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....und, Professional Tax and TDS under Section 192 of the Income Tax Act are made as applicable; also they were issuing Form-16 like it is issued to all other employees. Even in the salary return filed by the appellant company before the Income Tax authorities, the director's names have been included. The company does not pay the director's sitting fee to any of the directors. To discredit the said statement, no contrary evidence was produced by the Revenue to establish that the directors are not involved in the day-to-day function of the Company, but participate only in Board Meetings and consequently paid remuneration. 16. Also, from the documents produced by the appellant it is crystal clear that the Directors who are concerned with the management of the company, were declared to all statutory authorities as employees of the company and complied with the provisions of the respective Acts, Rules and Regulations indicating the Director as an employee of the company. No contrary evidence has been brought on record by the Revenue to show that the Directors, who were employee of the appellant received amount which cannot be said as ' salary' but fees paid for being Director of ....
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....s reproduced below : Circular No. 115/9/2009-S.T., dated 31-7-2009 Dy. No. 324/Comm (ST)/2008 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject: Service tax on commission paid to Managing Directors/Directors by the company - Regarding Below mentioned issues have been referred to the Board seeking clarifications, - (1) applicability of service tax under 'Business Auxiliary service on commission paid to Managing Directors/Directors (whole time, or Independent) by the company, (ii) applicability of service tax on Independent Directors who are part of the Board of Directors under 'Management Consultant service. 2. Both the matters have been examined by the Board and the clarifications are as under. - (i) Some Companies make payments to Managing Directors/Directors (Whole-time or Independent). terming the same as 'Commissions'. The said amount paid by a company to their Managing Director/Directors (Whole-time or Independent) even if termed as commission, is not the 'commission' that is within the scope of bus....
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....ver to the buyers. In fact, as per the explanation given by the appellant, it can be seen that the risk covers the defects with the product. In such cases, when there are defects to the product, the appellant/ manufacturer will have to recall the product and thereby incur huge financial loss. The insurance is for covering the financial loss of the appellant/manufacturer and it cannot be considered as a postmanufacturing activity. The finance / raising a capital or adjustment of finances by way of taking insurance etc. falls within the inclusive part of the definition. This cannot be said to be a post- manufacturing activity for the reason that such insurance policies addresses the financial risks of the manufacturer. Further, in the case of Granules India Ltd. (supra), the Tribunal has held that the credit availed on directors' liability insurance is eligible. I find that the disallowance of credit on this input service is unjustified and requires to be set aside, which I hereby do. 6. The second issue for consideration is regarding the eligibility of credit on service tax paid on Director Sitting Fees. The said issue is covered by the decision in the case of SKN Organ....