Page 101 - GSTL_30th April 2020_Vol 35_Part 5

2020 ] IN RE : CLAY CRAFT INDIA PVT. LTD. 587
payable to him is salary. In this view, the other questions need not be con-
sidered, and the appeal is dismissed with costs;
1.38 Therefore, from the above legal provisions and the article of asso-
ciation and Memorandum of Association of the applicant it is amply clear that in
our case it is the Board of Director who appoints the Director and other whole
time director and once it is admitted that there is an appointment then it is obvi-
ous that there exist a relationship of employer and employee between the Board
of Director and Managing Director/Wholetime Director.
1.39 The existence of employer-employee relationship must put to rest
the doubt that the salary and other allowance (such as travelling, medical etc.)
paid to the Director and Director are in the form of salary and thus is covered
under the Entry No. 1 of the Schedule III of the CGST Act, 2017.
1.40 Thus finally applicant is of the opinion that the salary and other
benefits paid to our directors and Director is not taxable under CGST Act, 2017
and consequently there is no liability cast upon the applicant to pay GST under
reverse charge mechanism as envisaged under Entry No. 6 of Notification No.
13/2017-Central Tax (Rate), dated 28th June, 2017 & Entry No. 7 of Notification
No. 10/2017-Integrated Tax (Rate), dated 28th June, 2017.
2. Questions on which the Advance Ruling is sought
(a) Whether GST is payable under Reverse Charge Mechanism (RCM)
the salary paid to Director of the company who is paid salary as per
contract.
(b) Whether the situation would change from (a) above if the Director
also is a part time Director in other company also.
3. Personal Hearing
In the matter personal hearing was granted to the applicant on 5-2-2020
at Room No. 2.29 NCRB, Statue Circle, Jaipur. Shri Madhu Sudan Sharma (Au-
thorised Representative) of applicant appeared for personal hearing. During the
personal hearing, he reiterated the submissions already made in the application.
He requested for early disposal of the application.
4. Comments of the Jurisdictional Officer
The jurisdictional officer (Assistant Commissioner, State Tax, Special
Circle-II, Jaipur, Room No. 322, 2nd Floor, J-14, Zonal Kar Bhavan, Jhalana Insti-
tutional Area, JLN Marg Jaipur, Rajasthan 302004) has submitted his comments
vide letter dated 3-1-2020 which can be summarized as under :-
1 - The salary paid to the Directors by the Company, the services provided
by the Directors to the Company are not covered under clause (1) of the
Schedule III to the Central Goods and Services Tax Act, 2017 as the Director
is not the employee of the Company. The consideration (salary) paid to the
Director is in relation to the services provided by the Director to the Com-
pany and the recipient of such service is the Company as per clause (93) of
section 2 of the CGST/RGST Act, 2017 and the supplier of such service is
the Director.
2 - Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017 and Notifi-
cation F. 12(56)FD/Tax/2017-Pt.-1-51, dated 29-6-2017 stated that “on cate-
gories of supply of services mentioned in column (2) of the Table below,
supplied by a person as specified in column (3) of the said Table, the whole
of central tax leviable under section 9 of the said Central Goods and Ser-

GST LAW TIMES  30th April 2020  101