Page 36 - GSTL_6th August 2020_Vol 39_Part 1

J18 GST LAW TIMES [ Vol. 39
point which was sub silentio, as no decision was rendered on the is-
sue can be termed as res integra.
Above mentioned are few of the important doctrines, which can be used as a tool
either to defend a case or to distinguish any decisions relied by the counterpart.
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[Continued from page J11]

(2) It was further clarified that there may be cases where a direc-
tor who is treated as employee of the company provides vari-
ety of services and some services may not be in accordance
with service contract. In such cases, those services which are
though provided by employee-director yet not in relation
with employment; the same will be excluded from purview
of Schedule-III and will be taxable on reverse charge basis.
Thus, each and every function performed by such director is
to be seen. Those services which are in relation to employ-
ment will not be taxable while the others which are outside
the terms of service-contract will be liable to tax under re-
verse charge.
(3) To determine the nature of payment made to employee-
director so to determine whether it is covered in Schedule-III
or not, the treatment of payment made to director under In-
come-tax Act, 1961 may also prove helpful. As per Income-
tax Act, salary paid to director is subject to TDS under Section
192 whereas remuneration paid to directors which is declared
separately other than salaries in Company’s Accounts is lia-
ble to TDS under Section 194J as Fees for Professional or
Technical Services. Therefore, where company is making
payment to director who is treated as employee of the com-
pany however, tax is being deducted under Section 194J, it
will be excluded from purview of Schedule-III and will be li-
able to tax under reverse charge basis.
While parting
This circular clearly illustrates the situations where remuneration paid to
directors will be covered in Schedule-III and where it will be taxed on reverse
charge basis. It seeks to clarify the ambiguities created by advance rulings. Con-
fusions created by these advance rulings will definitely be clarified by it and
trade is thankful to the Board for this clarification.
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GST LAW TIMES  6th August 2020  36