The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Bench remanded the Service Tax Demand on the Non-Employed Directors to Check Correctness of Reconciliation.
The issue related to this case is whether the appellant is liable to pay Service Tax under the Reverse Charge Mechanism (RCM) on the Directors remuneration paid to the whole time Directors who are employed with the company and also non employed Directors to whom the sitting fees are paid.
Step by Step Guidance for Tax Audit & E-filing, Click Here
Shri Abhay Y Desai, the Counsel appearing on behalf of the appellant, Jsl Industries Ltd submitted that the payment made to the whole time Director who is employed with the company, was paid in the form of salary to the director and the same was treated as salary for the income tax purpose, deduction of TDS, and this fact was made clear by the IT returns of the director.
Therefore the same case applies to Mrs. T R Amin who is a whole time director and is not liable to service tax the counsel stated by relying in the Tribunals decision on Ratnamani Metals and Tubes Ltd Vs. CCE & ST.
The appellant stated that regarding the non-employed directors who receive sitting fees, there is no dispute concerning their tax liability. They have confirmed that service tax has been paid on the remuneration for these non-employed directors. However, the lower authorities did not take this into account, citing a lack of proper correlation.
Step by Step Guidance for Tax Audit & E-filing, Click Here
The appellant further mentioned that they have submitted Annexure-C with their synopsis, which clearly demonstrates that service tax has been paid on the remuneration for the non-employed directors.
Shri Anoop Kumar Mudvel, Learned Superintendent (AR) appearing on behalf of the Revenue, i.e Commissioner of C.E. & C.-Anand reiterates the findings of the impugned orders.
The CESTAT Bench comprising Ramesh Nair (Judicial Member) and Raju (Technical Member) carefully considered the submissions made by both sides and observed that the remuneration paid to the Director in the form of salary is not liable to service tax, which is an issue which is already covered by the decision of Ratnamani Metals and Tubes Ltd (Supra). So the bench concluded that in case of whole time Director Mrs. T R Amin remuneration paid to her is not liable to service tax, hence the service tax related to the remuneration paid to Mrs. T R Amin has been set aside by the court.
Step by Step Guidance for Tax Audit & E-filing, Click Here
However there still remained confusion regarding proper co-relation regarding payment of service tax, for which the appellant produced the reconciliation chart. So from the reconciliation chart the court verified that it prima facie appears that the appellant has discharged the Service Tax. But the same needed to be verified by the Adjudicating Authority. Therefore, the matter related to the service tax demand on the remuneration paid to the non-employed directors had been remanded by the court to check the correctness of reconciliation given in the Annexure-C.
It was stated that the impugned order would be modified accordingly, and the appeal was allowed on those terms.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
