Oriental Chemical Works Vs Commissioner of Central Goods & Service Tax and Central Excise (CESTAT Delhi)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, considered an appeal against an Order-in-Appeal dated 26.03.2019 confirming a demand of service tax under the Reverse Charge Mechanism (RCM) on meeting fees paid to the directors of the appellant company.
Material Facts: During audit for 2012–13 and 2013–14, the Department found that the appellant had incurred expenditure of Rs. 7,14,000 towards meeting fees and Rs. 3,30,000 towards director remuneration. A show cause notice dated 31.01.2018 demanded service tax of Rs. 1,29,038 along with interest and penalty. The adjudicating authority and the Commissioner (Appeals) confirmed the demand, holding that meeting fees paid for attending board meetings constituted taxable services under Entry No. 5A of Notification No. 30/2012-ST dated 20.06.2012.
Appellant’s Submissions: The appellant contended that all five directors receiving meeting fees were whole-time directors. It submitted that payments made to whole-time directors were covered by the employer-employee relationship under Section 65B(44)(b) of the Finance Act, 1994 and therefore could not be subjected to service tax. Reliance was placed on earlier Tribunal decisions.
Revenue’s Submissions: The Revenue supported the findings of the lower authorities and sought dismissal of the appeal.
