2025-VIL-2174-CESTAT-CHE-ST
  1. Home
  2. 2025-VIL-2174-CESTAT-CHE-ST

SERVICE TAX CESTAT Cases

Service Tax on Director's remuneration, Employer-employee relationship - Demand of tax, interest and penalty on account of non-payment of service tax under Reverse Charge Mechanism in respect of remuneration paid to Directors/Chairman - Whether the amounts paid by the appellant-company to its Directors constitute "salary" paid in the course of employment, falling within the exclusion under Section 65B(44)(b) of the Finance Act, 1994 or whether such payments amount to "consideration" for taxable services rendered by the Directors in an independent capacity – HELD - The appellant has established through documentary evidence that the directors were functioning as whole-time employees. The appointment letters, AGM resolutions fixing salary, ledger entries as "Director's Salary", TDS deduction, Form-16 issuance, and classification of these amounts under "Salaries & Wages" in audited financial statements clearly demonstrate an employer-employee relationship – Further, the Tribunal has consistently held that remuneration paid to whole-time Directors, where TDS is deducted, falls within the exclusion under Section 65B(44)(b) and is not taxable under RCM - Since the payments to the Directors were found to be "salary" and not consideration for taxable services, the RCM provisions under Notification No.30/2012-ST have no application. RCM is triggered only upon receipt of a taxable service, and in the absence of a taxable service, the RCM provisions cannot be mechanically applied - The remuneration paid to the Directors constitutes "salary" under an employer-employee relationship and is therefore not exigible to service tax. Consequently, the impugned order is set aside and the appeal is allowed
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Kasi Viswanathan V

Weekly Summary

VIL Video

GSTR-9 & GSTR-9C of FY24-25
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?