2023 (4) TMI 441 - AT - Service Tax

Reverse Charge mechanism (RCM) - Renting services provided by the Directors in the capacity of Individual - Levy of service tax alongwith interest and penalty - rent paid to the landlord/owner of the premises and they happened to be, at the relevant time, Director of the appellant - HELD THAT:- The premises which were let out to the appellant are owned by Naveen Sawhney and D.K. Prashar in their individual capacity and it is not the case of the department that the properties were owned by them as Directors of the appellant. In such a situation, rent was collected by them in their individual capacity and merely because they also happen to be the Directors of the appellant would not mean that they had collected rent as Directors of the appellant.

The Commissioner (Appeals) assumed that Naveen Sawhney and D.K. Prashar are providing service of renting of immovable property as Directors of the appellant, whereas they are providing the said service in their individual capacity as owners of the premises and not as Directors of the appellant - The appellant, in such a situation, could not have been asked to pay service tax on a reverse charge mechanism. What needs to be further noticed is that service tax had been deposited on the rent received by Naveen Sawhney and D.K. Prashar from the appellant.

The order dated 07.05.2018 passed by the Commissioner (Appeals) cannot be sustained and is set aside - Appeal allowed.