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2020 (11) TMI 1083 - AAR - GSTLevy of GST - amount recovered/forfeited from employees who are leaving the services during probation period - HELD THAT - As the recovery of salary in the instant case does not fall within the ambit of supply i.e. sale transfer etc. set out under sub-Section (1) of Section 7 and it being excluded activities or transaction of services by an employee to the employer in the course of or in relation to his employment as stipulated vide clause 1 of Schedule III supra the conditions of Section 7 of CGST Act 2017 is not satisfied and accordingly the transaction in question cannot be termed as a supply within the meaning of Section 7 and therefore cannot be subjected to levy of GST. The employee opting to resign by paying amount equivalent to one month s salary in lieu of notice has acted in accordance with the contract. The employee is free to tender his resignation make payment of one-month salary and quit. Hence there is neither any active nor any passive role played by the employee. The same is nothing but transactions pertaining to services by employee to the employer in the course of or in relation to the employment. As the activities or transactions in question do not satisfy the test of supply under Section 7 of the CGST Act 2017 levy under Section 9 is not attracted here.
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