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TMI Blog2024 (9) TMI 700X X X X Extracts X X X X X X X X Extracts X X X X ..... chance that the renting service provided by a person happens to be a director. If the liability towards the services rendered by a person in his individual capacity is fastened on the company where he is a director, it would lead to extending the unwarranted liability on the company. The intention of the government is not that any activity/service which is performed by the director, the company would be liable to pay the tax. This Tribunal in the case of Cords Cable Industries Ltd. [ 2023 (4) TMI 441 - CESTAT NEW DELHI ] considered the issue of payment of service tax under RCM and observed that the directors in that case were providing service of renting of immovable property not as directors of the appellant company but in their individual capacity as owners of the premises and as the directors of the appellant and in such a situation, the appellant could not have been asked to pay the service tax on RCM - there are no good reason to differ from the view taken by the Co-ordinate Bench in M/s.Cords Cable Industries Ltd. Following the said decision, it is held that the appellant company cannot be saddled with the liability of service tax under RCM when the service of renting of imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant vide journal voucher dated 18.05.2016 during the course of audit itself reversed the cenvat credit amount in their input credit register. 3. Show cause notice dated 06.01.2017 was issued for recovery of cenvat credit amount of Rs.3,95,072/- and also for demanding service tax of Rs.85,200/- on the rent of immovable property along with interest and penalty under Section 75 and 78 of the Finance Act, 1994.[The FA, 1994] The show cause notice was adjudicated vide order dated 11.10.2017 confirming the demand under the show cause notice. On appeal filed by the appellant, the Commissioner (Appeals) confirmed the demand by the impugned order. Challenging the said order, the present appeal has been filed before this Tribunal. 4. We have heard Ms. Neha Somani, Chartered Accountant, learned counsel for the appellant and Shri Prashant Sinha, Authorised Representative for the respondent. 5. The challenge in the present appeal is now limited to the levy of service tax on the rental amount paid to the directors of the company on account of renting of immovable property and the levy of penalty under Section 78 of the Act. The submission of the learned counsel for the appellant is that the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the present case. According to him, in the case of M/s. Cords Cable Industries Ltd., the directors had already deposited the applicable service tax on forward charge basis whereas in the present case, no service tax was deposited by the directors. Secondly, in that case the director had obtained service tax registration for renting of immovable property , which in the present case has not been taken. The learned Authorised Representative emphasized that in the present case, the director had not paid the service tax on the amount of rent received and hence, no benefit can be granted in the terms of the decision in Cords Cable Industries Ltd. 10. The short question to be considered is whether the service tax can be levied under the RCM on the appellants, when the service of renting of immovable property provided by the directors was in their individual capacity and not as the director of the company. 11. Firstly, dealing with the issue on merits, it is the settled position of law that the liability to pay service tax in terms of Section 68(1) is on the service provider, however, the provisions of Section 68(2) read with Rule 2(i) and (d) of Service Tax Rules, 1994 and the Notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny in his personal capacity such as renting of immovable property to the company or body corporate are subject to Reverse Charge mechanism: 2 . Reference has been received requesting for clarification whether services supplied by a director of a company or body corporate in personal or private capacity, such as renting of immovable property to the company, are taxable under Reverse Charge Mechanism (RCM) or not. 2.1 Entry No. 6 of notification No. 13/2017 CTR dated 28.06.2017 provides that tax on services supplied by director of a company or a body corporate to the said company or the body corporate shall be paid by the company or the body corporate under Reverse Charge Mechanism. 2.2 It is hereby clarified that services supplied by a director of a company or body corporate to the company or body corporate in his private or personal capacity such as services supplied by way of renting of immovable property to the company or body corporate are not taxable under RCM. Only those services supplied by director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate shall be taxable under RCM in the hands of the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eason of fraud or collusion or wilfulful mis-statement or suppression of facts. Both the Authorities below have upheld the imposition of penalty as at the time of audit of the records of the appellant company, the cenvat credit was not reversed and if the audit had not taken place, the appellant would not have reversed the said amount. 18. We find that the amount of cenvat credit taken by the appellant on the exempted services was in contravention of the provisions of the Finance Act and the Rules made thereunder with intent to evade payment of duty. The Authorities below are correct in observing that the amount of cenvat credit was reversed only after the audit has taken place. We also find that instead of directing the imposition of mandatory penalty of 100%, the Adjudicating Authority had granted liberty to the appellant by directing that the imposition of penalty shall be limited only to 25%, subject to the condition that such reduced penalty is also paid within 30 days of the date of receipt of the order. Hence no interference is called for in imposition of penalty. Accordingly, we do not find any error in the imposition of penalty. 19. The appellant is also required to pay th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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