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2022 (1) TMI 903 - AAR - GSTLevy of GST - recoveries made from the employees towards providing parental insurance - notice pay recoveries made from the employees on account of not serving the full notice period - HELD THAT:- In the case of IN RE: M/S. JOTUN INDIA PVT. LTD. [2019 (10) TMI 482 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] and also in the case of IN RE: POSCO INDIA PUNE PROCESSING CENTER PRIVATE LIMITED [2019 (2) TMI 63 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA] are similar to the facts of the present case with respect to recovery of premiums from the employees, paid by the applicant on Parental Insurance Policy, there is no reason or us to deviate from the decisions taken in both the said cases and therefore we hold that, in the instant case, GST would not be payable on recoveries made from the employees towards providing parental insurance. GST on the notice pay recoveries made from the employees on account of not serving the full notice period? - HELD THAT:- The levy under CGST Act, 2017 is on “supply” of goods or services or both. The word “such as” used preceding the words sale, transfer, barter, exchange, etc. indicates that the forms of supply shall be those which are enumerated therein or of similar character but not of other dissimilar forms of supply. The expression “such as” indicates the character of the transactions - The employee opting to resign by paying amount equivalent to month of salary in lieu of notice, has acted in accordance with the contract and that being the case no question of any forbearance or tolerance does arise. Further, as per the agreement, the resignation by the employee is not subject to any acceptance or approval and employee is free to tender his resignation, make payment of notice period salary to leave. Hence, there is neither any activity nor any passive role played by the employer. It must be noted here, that there is no consideration within the meaning of Sec.2(31)(b) of the CGST Act, 2017 flowing from an act of forbearance in as much as there is no breach of contract, as a question of any consideration for forbearance would arise in case of breach of contract. It may be concluded that, recovery of notice pay from dues of employee / payment of notice pay by the employee who could not serve the notice for the period as per contractual agreement / appointment letter does not amount to supply and therefore as per Section 7 (1A) of the CGST Act, 2017, the provisions of Schedule II does not come into play - also relying on the reasoning and decision in the case of GE T & D INDIA LIMITED (FORMERLY ALSTOM T & D INDIA LIMITED) VERSUS DEPUTY COMMISSIONER OF CENTRAL EXCISE [2020 (1) TMI 1096 - MADRAS HIGH COURT] it is held that, the notice pay recovered by the applicant from its employees is not liable to GST. GST would not be payable on the notice pay recoveries made from the employees on account of not serving the full notice period.
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