Are services by the Director of a Company or body co-corporate in his / her individual capacity, is
chargeable to tax under Reverse Charge Mechanism?
Services by said Director is under a reverse charge mechanism, where said Company or body corporate
pays GST to the Government on behalf of the Director. There have been clarity issues since the beginning
that what constitutes a Service by a Director. The recent circular by CBIC seeks to clarify this according
to which only such services which are provided by the Director in his / her capacity as a director, are
taxable under RCM. For instance, the service of renting immovable property by a director, services
provided by the firm in which said Director is also a partner, and services of his profession like medicine,
etc., should not be taxed under RCM. The circular did not clarify what constitutes a service by a director,
in our view, sitting fees, managing operations, managing resources advising in policies and decision-making, etc. of such Company or body Corporate are some of the examples which might constitute services provided by Director in his / capacity as a director.
Is the Supply of food or beverages in the cinema hall taxable as a restaurant service?
If the food or beverages are supplied by way of or as part of a service and supplied independently of the
cinema exhibition service, such supply shall be taxable as ‘restaurant service’, according to a circular
issued by CBIC. However, if, the service of cinema tickets and supply of food and beverages are clubbed
together, and such bundled supply meets the criteria for a ‘composite supply’, then the entire supply will
attract GST at the rate applicable to the service of an exhibition of cinema, being the principal supply.
Source: CBIC Circular No. 201/13/2023-GST dated 01/08/2023
Ishan Kakkar, Associate- Indirect Tax, SW India
