2025-VIL-365-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax liability on Remuneration paid to Whole-time Directors - Appellant discharged service tax on the sitting fees and other amounts paid to the independent and non-executive directors. However, the appellant did not discharge service tax under reverse charge mechanism (RCM) on the remuneration (salary, commission and perquisites) paid to the promoter (whole-time director/whole-time directors), considering the services rendered by them to be in relation to employment – Demand of service tax on the remuneration paid to the whole-time directors under RCM - Whether service tax is leviable on the remuneration paid to the Chairman and Managing Director, Executive Directors (whole-time directors) of the Company – HELD - The Tribunal relied on its earlier decision in the case of Amara Raja Batteries Ltd v. CCT, Tirupati, wherein it was held that the Vice Chairman-cum-Managing Director, even if he is a promoter, is an employee of the company. The Tribunal also referred to various other case laws where the Courts have held that Directors and Managing Directors can act in a dual capacity and can be called an employee of the company - the appellant has clearly discharged its service tax liability in respect of Independent Directors/Non-executive Directors and the Income Tax has been paid by treating the remuneration as salary income, and Provident Fund has also been deducted accordingly. Therefore, the demand for service tax on the remuneration paid to the Whole-time Directors cannot be sustained - the impugned order is set aside and the appeal is allowed
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