Director is representative and not service provider

[CA Akash Phophalia]

The company is a separate legal entity and it has separate identity. The company can enter into the contract on its own. Since the company is not the natural person, therefore, it needs some natural person to work on its behalf. The Director is the person who enters into the contract for and on behalf of the company. By no stretch imagination it can be held that the Director acting on behalf of the company itself is responsible as service provider instead of the company.

However, in many situations it was confirmed by the department at lower authority that as the contract is executed in between the service receiver and the company and the same was signed by the Director on behalf of the company, therefore, the director is the service provider and is liable to discharge the service tax liability.

But the Tribunal has set aside such orders and correctly held that the Director is only representing the company and by no stretch imagination it can be considered that the Director is providing service and is liable to pay service tax.

Case referred :- Bhavna Jayantibhai Desai v/s CCE andST, Rajkot [2014 (10) TMI 688 - CESTAT AHMEDABAD]

This is just an information for your reference. It does not constitute our professional advice or recommendation of firm.

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