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2019 (1) TMI 433 - AT - Service TaxLevy of Service Tax - remuneration paid to the Directors - reverse charge mechanism - N/N. 45/2012-ST dated 7.8.2012 and 46/2012-ST dated 7.8.2012 - service or not - employer-employee relationship - Held that:- The Appellant have placed on record the Form-16 issued by the appellant indicating deduction of income tax at source on the salary paid to each of the Directors. Besides, the appellant had also produced the contribution made to the Employees Provident Fund for each of the Directors, as required in case of other employees under the relevant Laws - Similarly, the Form-32 as required to be filed under the Companies Act, with the Registrar of companies, the four directors are shown as executive directors indicating that they are employees of the company. It is the agreement between the employer i.e. company and the Director would reveal the exact relationship between them - In the present case, no such agreement exists between the employer and the Directors, hence there exists no employer-employee relationship. All the necessary deductions on account of Provident Fund, Professional Tax and TDS under Section 192 of the Income Tax Act are made as applicable; also they were issuing Form-16 like it is issued to all other employees. Even in the salary return filed by the appellant company before the Income Tax authorities, the director’s names have been included. The company does not pay the director’s sitting fee to any of the directors. To discredit the said statement, no contrary evidence was produced by the Revenue to establish that the directors are not involved in the day to day function of the Company, but participate only in Board Meetings and consequently paid remuneration. Also, from the documents produced by the Appellant it is crystal clear that the Directors who are concerned with the management of the company, were declared to all statutory authorities as employees of the company and complied with the provisions of the respective Acts, Rules and Regulations indicating the Director as an employee of the company - No contrary evidence has been brought on record by the Revenue to show that the Directors, who were employee of the appellant received amount which cannot be said as ‘salary’ but fees paid for being Director of the company - The Income Tax authorities also assessed the remuneration paid to the said directors as salary, a fact cannot be ignored. Appeal allowed - decided in favor of appellant.
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