Proficient expenses of director other than pay is available under RCM premise: AAAR Rajasthan

  • GST
  • Case Law
  • High Court

Fact of the Case 

  • The appellant made bone China Crockery, Transfer Sheet Decalcomania, other Utensils Item and Moulds. It filed an application for an advance ruling to determine the taxability of salary paid to the Director of the company.  
  • It meant that its Directors would be working in the company at different levels of management in the organization and every single one of them would hold charge of acquirement of crude material, creation, quality checks, dispatch, bookkeeping and so forth 

 

Judgement 

  • The Authority for Advance Ruling held that consideration paid to the Directors by the company would attract GST under reverse charge mechanism as it would be covered under entry No. 6 of Notification No. 13/2017 Central Tax (Rate) dated 28.06.2017 was issued under Section 9(3) of the CGST Act, 2017. It filed appeal against the order. 
  • The appellant submitted that the Authority for Advance Ruling has erred in deciding that the consideration paid to the Directors by the applicant company will attract GST under reverse charge mechanism. 
  • The Appellate Authority for Advance Ruling saw that CBIC had given a Circular No. 140/10/2020-GST dated 10.06.2020 and explained that pay paid by organizations to the autonomous chiefs or those chiefs who're not the representative of the said organization would be available in the possession of the organization, on converse charge premise. 
  • It was also clarified that part of Director's remuneration which would be declared as ‚ÄúSalaries in the books of a company and subjected to TDS under Section 192 of the IT Act, would not be taxable for services by an employee to the employer during or in relation to his employment under Schedule III of the CGST Act, 2017. Therefore, professional fees paid to directors other than salary would be taxable under RCM only.