QUESTION
Mr. A is a Practicing Chartered Accountant registered under GST. He has been providing professional services in his personal capacity to a Pvt. Ltd. company for the last 15 years. He is raising regular monthly invoices for work done on retainership basis and charging Service Tax/GST on the same. From April 2021, He has been appointed as a non-Executive Director of this company. As a director He is getting only Board Meeting fee from this company. He is not getting any remuneration in any form from this company. However, He has been rendering professional services relating to day review of operations of this company and statutory compliances of the clients of this company, which he was also rendering before becoming director of this company. He has been getting a fixed monthly consultancy charges for these services being rendered. He is also rendering services to his other clients also. Query: After becoming director in this company, whether he has to charge GST under forward charge on the professional charges to the company or the company has to pay GST under RCM on the fee for his services ?
ANSWER
Facts of the case:
A practicing CA provides professional services in his personal capacity to a
company for the last 15 years. Now he is appointed as a non-executive director.
Law Applicable:
Notification No. 13/2017- Central Tax (Rate)
| 6 |
Services supplied by a director of a company or a body corporate to the said company or the body corporate. |
A director of a company or a body corporate |
The company or a body corporate located in the taxable territory. |
Interpretation:
Services providing by a director of a company to the said company are covered under RCM. However only those services shall be covered which are provided in the capacity of a director. Whether a supply is provided in the capacity of a CA or a director remains a question of fact. The fact that professional fee was charged in capacity of a CA for the last 15 years is proof enough that consideration received to the tune of this amount can still be allocated to services that are being rendered in capacity of a CA an not a non-executive director. For the balance consideration received, it can be said that they are received for services rendered in role of a non executive director.
Conclusion:
Consideration received since the last 15 years may still be allocated to supply
rendered in the role of a CA and thus liable to FCM.
Balance consideration received in
the capacity of a non-executive director shall be subject to RCM. (Reply dt.
31/01/2022)