2026-VIL-1237-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Demand of Service Tax on Meeting Fees paid to Whole-time Directors under Reverse Charge Mechanism – Appellant incurred expenses on meeting fees paid to whole-time directors. The revenue raised a service tax demand under Reverse Charge Mechanism contending that meeting fees constituted taxable service and the lower authorities confirmed the demand - Whether service tax is payable on meeting fees paid to whole-time directors under RCM – HELD – It is settled jurisprudence that a whole-time director is essentially an employee of the company under the provisions of the Companies Act and is recognized as key managerial personnel. Whatever remuneration is paid to a whole-time director in conformity with the Companies Act is pursuant to an employer-employee relationship - The levy of service tax on such payment falls within the exclusion clause of the definition of Service under Section 65B(44)(b) of the Finance Act, 1994, which excludes provision of service by an employee to the employer in the course of or in relation to his employment – Further, the CBEC Circular dated 01.12.2008 clarifying that so long as the activities performed are duties within the framework of the terms of employment, the amount paid by an employer to an employee would not be subject to service tax - No service tax is leviable on the Meeting Fees paid to Whole-time Directors and therefore, the impugned order is unsustainable and set aside - The appeal is allowed
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