TaxTMI 
TaxTMI 
2026 (2) TMI 910
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.... notices were issued to the appellant for earlier period which were dropped by the adjudicating authority but on appeal filed by the Revenue against this order, the Commissioner (Appeals) allowed the department's appeal and confirmed the demand against which, the appellant had filed appeal before this Tribunal which vide final order No. 12419-12420/2020 dated 22th October, 2024 was allowed by passing an order in favour of the appellant. 1.1 The present appeal pertains to demand for the subsequent period i.e. from 2015-16 to June 2017. For this period, a show cause notice dated 11.07.2018 was issued to the appellant demanding service tax of Rs. 24,99,500/- under reverse charge mechanism, on account of commission paid to their directors. T....
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....g Directors/Directors (whole time or independent) by the company. The said circular is 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 Indepe....
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.... the above, it is clarified that remunerations paid to Managing Directors/Directors of companies whether whole-time or independent when being compensated for their performance as Managing Directors/Directors would not be liable to service tax. Pending issues may be resolved in line with the above. From the above circular, it was categorically clarified that even if any amount paid to the director as a commission, the said amount paid by a company to their directors is not commission within the scope of Business Auxiliary Services'. With this clarification also, it is clear that payment made to directors even under the nomenclature of commission, the same is not the commission classifiable under 'Business Auxiliary ....
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.... Section 192 of Income Tax Act,1961 and form 16 was issued for each financial year. It is observed that Income Tax Act, 1961 is concerned with salary paid to the employees. With these facts it is clear that the remuneration paid to the directors is not liable to service tax. This issue is no longer res integra as decided in catena of case laws cited by the learned Counsel for the appellant which are the reproduced below:- In Allied Blenders and Distillers Pvt Ltd Vs. C.C.E & S.T. Aurangabad - 2019 (24) G.S.T.L. 207 (Tri.-Mumbai) case this Tribunal considering all the provisions and identical facts of the case decided the matter as under:- 5. The short issue involved in the present appeal for determination is whether remune....
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....f 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'. Advancing the arguments on behalf of the appellant, Ld. Advocate submits that since the relation between the appellant and the four Directors are in the nature of employer a....
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.... time employment of the company;" "Executive Director" means a whole time director as defined in clause (94) of Section 2 of the Act. In the present case, the Board of Directors (BOD) are empowered to appoint under clause 93 of the Articles of Association, Managing Director and Whole-time Director with such conditions as may deem fit. It reads as follows : - 93. Managing Director/Whole-time Director/Manager. - Subject to provisions of the Act, the Rules framed thereunder and the approval of the Promoter(s), the Board may from time to time, appoint Managing Director/Whole-time Director/Manager for one or more of the divisions of the business carried on by the Company and to enter into agreement with him in such ter....