No Double Tax, No Tax On Director Salary: CESTAT Kolkata Grants Complete Relief To Neelamber Caterers

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside service tax demands and denial of CENVAT credit raised holding that the issues were already settled in the assessee's favour in an earlier decision. A Bench comprising Technical Member K. Anpazhakan was hearing an appeal challenging the appellate order which had upheld service tax demands of ₹2.84 lakh and reversal of CENVAT credit of ₹1.44 lakh. The demand related to alleged service tax liability under reverse charge on manpower supply services and on remuneration paid to a director, along with consequent denial of CENVAT credit. The CESTAT noted that in the assessee's own case for an earlier period, it had already ruled that where the service provider had collected and paid service tax, the same tax could not again be demanded from the recipient under the reverse charge mechanism, as it would amount to double taxation. Following this settled position, the Bench held that the present demand on manpower supply services was unsustainable. On the issue of service tax on director's remuneration, the Bench held that where remuneration is paid as salary and tax is deducted under the Income Tax Act, the director acts as an employee of the company. Services rendered by an employee to the employer during the course of employment fall outside the scope of “service” under the Finance Act, 1994, and therefore no service tax could be levied. The Bench further held that once service tax has been paid and valid invoices are available, CENVAT credit cannot be denied merely on the ground that the department believes tax ought to have been paid by the recipient under reverse charge. With the main demands being set aside, the Tribunal also ruled that no interest or penalties could survive. In view of the above, the Bench allowed the appeal and the impugned order was quashed with consequential relief to the assessee Case Title: M/s. Neelamber Catters Private Limited Vs. Commissioner of C.G.S.T. and Central Excise Case No.: Service Tax Appeal No. 75161 of 2024 Appearance for Appellant: Shri Rishi Raju Appearance for Respondent: Shri Prasenjit Das Click Here To Read/Download Order

No Double Tax, No Tax On Director Salary: CESTAT Kolkata Grants Complete Relief To Neelamber Caterers

Rajnandini Dutta

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