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TMI Blog2019 (4) TMI 1595X X X X Extracts X X X X X X X X Extracts X X X X ..... est and penalty as proposed in the Show Cause Notice dated 12.03.2014. 2. Briefly stated, the facts of the case are that the appellant assessee is a manufacturer of Ferro Alloys on which central excise duty is being paid. In the course of business, the assessee company pays remuneration to its whole time directors which has fixed as well as variable components. The said variable component comprised of commission payable on the basis of percentage of profit in conformity with the provisions of the Companies Act. The Department has raised demand of service tax under reverse charge mechanism on the said remuneration paid to the whole time directors, in terms of Notification no. 30/2012-ST, dated 20.06.2012, as amended. It is the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyee to the employer, from the levy of service tax. In support of his contention, he relied upon the decision of the Tribunal in the case of Rent Works India Pvt Ltd vs. CCE, Mumbai 2016 (43) STR 634 (Tri-Mum) wherein it is held that there is a difference between salary and consultancy fee inasmuch as when the Income Tax Department considers payment in the nomenclature 'consultancy fee' as salaries, on which TDS is also made, the said payments cannot be said towards rendition of taxable service for levy of service tax. He also relied on the decision of the Tribunal in the case of PCM Cement Concrete Pvt Ltd. vs. CCE, Siliguri 2018 (9) GSTL 391 (Tri-Kol) wherein the Tribunal observed that consideration paid to whole time directors would be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entire service tax demand. 5. Heard both sides and perused the appeal records. 6. In the instant case, it is not in dispute that service tax has been duly paid on remuneration paid to directors who are not whole time employee directors. The only dispute herein is for payment of remuneration to whole time directors, which is a fact on record. The provisions of Companies Act, 2013, contained in section 2(94), duly defines 'whole time director' to include a director in the whole-time employment of the company. A whole-time director refers to a director who has been in employment of the company on a fulltime basis and is also entitled to receive remuneration. We further find that the position of a whole-time director is a position of si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This factual position cannot be faulted in absence of any evidence to the contrary. The submission of Ld. DR as well as the finding made by the Commissioner in the impugned order that since the whole time directors are compensated by way of variable pay and hence not employees, does not have any legal basis and is completely misplaced, and the same cannot be sustained. The decision of the Tribunal in Rent Works India (Supra) has clearly set the legal position that when the Income Tax Department considers payment in the nomenclature 'consultancy fee' as salaries, on which TDS is also made, the said payments cannot be said towards rendition of taxable service for levy of service tax. The decision in case of PCM Cement Concrete Pvt Ltd. (Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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