2018 (12) TMI 1361 - AT - Service Tax

Demand of Service Tax - Remuneration paid to the directors of the company - Reverse charge mechanism - Held that - The learned Commissioner (Appeals) has observed that in the absence of documents such as TDS Certificate, Ledger Account and other related documents substantiating appellant s claim of employer-employee relationship between the said directors and the claim of the appellant could not be examined for the period from July, 2012 to August, 2013 and therefore, said claim was rejected - also, the learned Commissioner (Appeals) did not have advantage of the documents submitted here - appeal allowed by way of remand.

Summary

Issues:
Appeal against Order-in-Appeal regarding service tax on remuneration paid to directors under reverse charge mechanism.

Analysis:
The appeal before the Appellate Tribunal CESTAT ALLAHABAD was in relation to a service tax matter concerning the payment of remuneration to directors of a company under the reverse charge mechanism. The appellant contended that two directors were whole-time directors until August 2013, after which their designation changed to non-executive directors, and they received consultancy fees from September 2013 to March 2014 on which service tax was paid. However, the Original authority confirmed the demand without appreciating the contentions and imposed a penalty. The Commissioner (Appeals) observed the absence of documents supporting the employer-employee relationship between the directors and the company for the period from July 2012 to August 2013, leading to the rejection of the claim for that period. The Commissioner remanded the matter back to the Original authority for the period from September 2013 to March 2014. The appellant highlighted that Form-32 submitted to the Registrar of Companies mentioned the directors as whole-time directors, and tax was deducted at the source under Form-16 for the period from July 2012 to August 2013.

Upon reviewing the submissions and records, the Appellate Tribunal noted that the Commissioner (Appeals) did not have access to the documents submitted during the appeal. Consequently, the matter was remanded to the Original authority with directions to consider the documents such as Form-32 and Form-16 for the period from July 2012 to August 2013, along with re-examining the issue for the period from September 2013 to March 2014 as directed by the Commissioner (Appeals). The impugned order was set aside concerning the period from July 2012 to August 2013, and the matter was remanded for a fresh decision based on the provided directions. The appeal was allowed by way of remand, providing an opportunity for a thorough review of the documents and claims presented by the appellant.