Home Case Index All Cases Service Tax Service Tax + HC Service Tax - 2020 (1) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (1) TMI 1096 - HC - Service TaxClassification of services - Demand of service tax on Notice pay - facilitation of termination of employment or not - petitioner is deemed to have facilitated the termination of employment - obligation to refrain from an Act or to tolerate an Act or a situation, or to do not act - HELD THAT:- The query raised relates to a contra situation, one, where amounts have been received by an employee from the employer by reason of premature termination of contract of employment, and the taxability thereof. The Board has answered in the negative, pointing out that such amounts would not be related to the rendition of service. Equally, the employer cannot be said to have rendered any service per se much less a taxable service and has merely facilitated the exit of the employee upon imposition of a cost upon him for the sudden exit. The definition in clause (e) of Section 66E is not attracted as the employer has not 'tolerated' any act of the employee but has permitted a sudden exit upon being compensated by the employee in this regard. Though normally, a contract of employment qua an employer and employee has to be read as a whole, there are situations within a contract that constitute rendition of service such as breach of a stipulation of noncompete. Notice pay, in lieu of sudden termination however, does not give rise to the rendition of service either by the employer or the employee. Petition allowed.
|