TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 10
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....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 provisions of Sections 67 & 68 of Finance Act 1994, read with Rule 2(1)(d)(i)(EE) and Rule 6 of Service tax Rules, 19....
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....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. Bengal Beverages Pvt Ltd v. CGST & Excise, Howrah - Final Order No. 75561 / 2020 dated 09.10.2020 of the CESTAT, Kolkata ix. They have relied on Circular No. 140/10/2020-GST dated 10.06.2020 ....
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....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 from 07.08.2012 to 31.03.2014 amounting the Rs.2,11,78,118/-, proceedings were initiated against them. The Adjudicating Authority in his impugned order has held that there is no employer-employee relationship between the Directors and t....
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....ed; (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 and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons. Explanation 4.- A person carrying on a business through a branch or agency or representational office in any territory shall be treated as having an establishment in that territory;" 9. It is not disputed in this case that the remuneration paid to th....
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....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 company. 10.3 In view of the above discussion, it becomes clear that the activity of appointment of Directors and their services is covered under Negative List of services prescribed under Section 65B (44) (b) of the FA 1994 and so it follows that the impugned Order-in-Original No. 15/2015 (ST-Commr.) dated 23.10.2015 is not tenable. 11. The contention of the Ld. Chartered Accountant for the Appellant was t....
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....tors. 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 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 ....