NO Service Tax on Notice Pay recovery from Employee :

By | March 18, 2020
(Last Updated On: March 18, 2020)

 

CESTAT, ALLAHABAD BENCH

HCL Learning Ltd.

v.

Commissioner of Central Goods & Services Tax, Noida

MRS. ARCHANA WADHWA, JUDICIAL MEMBER
AND ANIL G. SHAKKARWAR, TECHNICAL MEMBER

FINAL ORDER NO. 71950/2019
SERVICE TAX APPEAL NO. 70580 OF 2018

NOVEMBER  25, 2019

Nishant Mishra, Adv. for the Appellant. Anupam Kumar Tiwari, AR for the Respondent.

ORDER

Anil G. Shakkarwar, Technical Member. – After hearing both the sides duly represented by learned advocate Shri Nishant Mishra appearing on behalf of the appellant and Shri Anupam Kumar Tiwari appearing on behalf of the Revenue, we note that in the present case the employer has been served with a show cause notice demanding service tax from that part of the amount which he recovers out of the salary paid to the employee if the employee breaches the contract of total term of employment. From the record, we note that the term of contract between the appellant and his employee are that employee shall be paid salary and the term of employment is a fixed term and if the employee leaves the job before the term is over then certain amount already paid as salary is recovered by the appellant from his employee. This part of the recovery is treated by Revenue as consideration for charging service tax.

2. We hold that the said recovery is out of the salary already paid and we also note that salary is not covered by the provisions of service tax. Therefore, we set aside the impugned order and allow the appeal.

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