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2020 ] GST ON DIRECTOR’S REMUNERATION — A CRITICAL ANALYSIS J95
made or agreed to be made for a consideration by a person in
the course or furtherance of business;
(b) import of services for a consideration whether or not in the
course or furtherance of business; and
(c) the activities specified in Schedule I, made or agreed to be
made without a consideration.
(1A) where certain activities or transactions constitute a supply in accord-
ance with the provisions of sub-section (1), they shall be treated either as
supply of goods or supply of services as referred to in Schedule II.
(2) Notwithstanding anything contained in sub-section (1) -
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Gov-
ernment, a State Government or any local authority in which
they are engaged as public authorities, as may be notified by
the Government on the recommendations of the Council,
shall be treated neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of sub-sections (1), (1A) and (2), the Govern-
ment may, on the recommendations of the Council, specify, by notification,
the transactions that are to be treated as -
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
Section 7(2) read with Clause (1) of the Schedule III to the CGST Act, 2017 provides
that services by an employee to the employer in the course of or in relation to his
employment shall be treated neither as a supply of goods nor a supply of services.
Further, Section 9(3) of the CGST Act extends the levy on the recipient of
the goods or services for specific category of goods and services as notified. Ac-
cording to Serial No. 6 of Notification No. 13/2017-C.T. (Rate), dated 28-6-2017,
services supplied by a Director of a company or a body corporate to the said
company or the body corporate is liable to tax under reverse charge. Thus, the
company or a body corporate located in the taxable territory, being recipient of
service is liable to pay tax under reverse charge.
According to Section 2(31), “consideration” in relation to the supply of
goods or services or both includes -
(a) any payment made or to be made, whether in money or otherwise, in
respect of, in response to, or for the inducement of, the supply of
goods or services or both, whether by the recipient or by any other
person but shall not include any subsidy given by the Central Gov-
ernment or a State Government;
(b) the monetary value of any act or forbearance, in respect of, in re-
sponse to, or for the inducement of, the supply of goods or services or
both, whether by the recipient or by any other person but shall not in-
clude any subsidy given by the Central Government or a State Gov-
ernment :
Provided that a deposit given in respect of the supply of goods or
services or both shall not be considered as payment made for such
supply unless the supplier applies such deposit as consideration for
the said supply;
In light of the aforesaid legal provisions, the moot question that arises here is
whether the remuneration paid to the directors is a consideration for supply of

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