TaxTMI 
TaxTMI 
2025 (8) TMI 10
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....le given below for the services rendered by them to the Appellant company for the period Aug 2012 to March 2014 but have not discharged the Service Tax thereon. Sl. No. Name of the Director Renumeration received during Aug 2012 to Feb 2013 (in Rs) Renumeration received during March 13 to Dec 2013 (in Rs) Renumeration received during Jan 14 to March 14 (in Rs) 1 P. Balasubramanian (CHAIRMAN) 2,10,00,000 1,20,00,000 60,00,000 2 B. Prabhakaran (Managing Director) 2,10,00,000 1,45,00,000 1,65,00,000 3 B. Karthikeyan (Director) 2,10,00,000 1,45,00,000 1,65,00,000 4 B.Vasuki(Director) 70,00,000 40,00,000 20,00,000 5 V. Sakthivel (Director) Finance 24,00,000 27,00,000 9,00,000 6 PRADIPTA KUMAR Mistra (Director) Projects 19,36,000 19,36,000 8,00,000 7 K.K. Biran (Director) Mines & Business Development) 19,36,000 21,36,000 6,00,000 GRAND TOTAL 7,62,72,000 5,17,72,000 4,33,00,000 2.2 Consequently, the Show Cause Notice No. 81/2014 (ST)(COMMR) dated 29.09..2014, was issued alleging that the Appellants have contravened the provi....
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....2020 (33) GSTL 228 (Tri.-Kolkata)] wherein it was held that whole time directors are employees of the company and when TDS is deduced under section 192 of the Income tax Act and Form 16 has been issued, the directors are considered to be employees of the company and therefore, service tax under reverse charge is not payable. vi. Further the appellant also relied on the decision of the Hon'ble Mumbai Tribunal in the case of Allied Blenders and Distillers Pvt. Ltd. Vs. CCEx & ST [2019 (24) GSTL 207] wherein it has been held that the remuneration paid to Directors who are also employees of the company is not liable to service tax under reverse charge mechanism. vii. Reliance was also placed on the decision of the Hon'ble Ahmedabad Tribunal in the case of Alchemie Organics Vs. CCEx & ST [(2024) 25 Centax 381] wherein it was held that the remuneration (salary+ allowances + commission on profit of company) is not liable to service tax under reverse charge mechanism. viii. In addition, reliance was also placed on the following decisions: a. Vectus Industries Ltd v. CST - Final Order No. 71942/2019 dated 26.11.2019 of the CESTAT Allahabad b.....
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....ing paid sitting fees and even profits of the appellant company. If the employee of the company enters into contract with other firm wherein, he is of financial interest, there is no employer and employee relationship which is the case in respect of many Directors. Further, no employee is given power to recruit and or dismiss another employee. So, he has finally requested to reject the Appeal. 5. We have heard both the sides and considered the written and oral submissions made and evidences available on record. 6. The short issue involved for determination in the present appeal is whether the remuneration paid to the Directors by the appellant is chargeable to Service Tax and whether the appellants are required to discharge Service Tax under reverse charge mechanism in terms of Rule 2(1)(d)(i)EE read with Section 67 & 68 of the Finance Act, and Rule 6 of the Service Tax Rules, 1994? 7. Facts in this appeal indicate that the Appellant Company had paid remuneration to the Directors for the services rendered by them. As the Appellant has failed to pay appropriate service tax under Reverse Charge Mechanism on the remuneration paid to the Directors of the Company for the period....
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....he purposes of this clause, the expression "transaction in money or actionable claim" shall not include- (i) any activity relating to use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; (ii) any activity carried out, for a consideration, in relation to, or for facilitation of, a transaction in money or actionable claim, including the activity carried out- [ (a) by a lottery distributor or selling agent on behalf of the State Government, in relation to promotion, marketing, organising, selling of lottery or facilitating in organising lottery of any kind, in any other manner, in accordance with the provisions of the Lotteries (Regulation) Act, 1998 (17 of 1998.); ] (b) by a foreman of chit fund for conducting or organising a chit in any manner.] Explanation 3.- For the purposes of this Chapter, - (a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons; (b) an establishment of a person in the taxable territory....
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....a percentage of the profits in addition to their fixed Pay. Further the Form 16 attached to the Appeal paper Book makes a mention that it is TDS deducted on Salary. 10.2 We also find that a whole-time director is considered and recognized as 'key managerial personnel' under Section 2(51) of the Companies Act. Further, he is an officer in default [as defined in clause (60) of Section 2] for any violation or non-compliance of the provisions of Companies Act. Thus, in our view, the whole-time Director is essentially an employee 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 /appellant and the whole-time Directors. 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 Appellant....
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....203 of the Income Tax Act, 1961 for tax deducted at source on salary in respect of these directors that was adduced in evidence. 8) We also find that the Tribunal in Maithan Alloys Ltd v. Commissioner of C.Ex & ST, Bolpur, 2020 (33) GST 228 (Tri-Kolkata) has held as under: "6. In the instant case, it is not in dispute that service tax has been duly paid on remuneration paid to directors who are not whole-time employee directors. The only dispute herein is for payment of remuneration to whole time directors, which is a fact on record. The provisions of Companies Act, 2013, contained in Section 2(94), duly defines 'whole-time director' to include a director in the whole-time employment of the company. A whole-time director refers to a director who has been in employment of the company on a full-time basis and is also entitled to receive remuneration. We further find that the position of a whole-time director is a position of significance under the Companies Act. Moreover, a whole-time director is considered and recognized as 'key managerial personnel' under Section 2(51) of the Companies Act. Further, he is an officer in default [as defined in clause (60) of Section....