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2022 (5) TMI 427 - AT - Service TaxLevy of service tax - consideration received on account of ‘notice pay’ from the employees - declared service or not - appellants herein had collected certain amount as ‘Notice Period Pay’ or ‘Bond Enforcement Amount’ from their employees, who want to quit the job without notice - HELD THAT:- The term ‘notice pay’ mentioned in the employment contract cannot be considered as a service, more specifically as the taxable service inasmuch as neither of the parties to the contract have provided any service to each other. Thus, the phrase ‘service’ defined in Section 65B (44) ibid and ‘declared service’, as defined in Section 65B (22) are not applicable for consideration of such activity as a service for the purpose of levy of service tax. Further, the amount received as compensation by the appellants cannot be equated with the term ‘consideration’ inasmuch as the latter is received for performance under the contract; whereas, the former is received, if the other party fails to perform as per the contractual norms. The Hon’ble Madras High Court 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] has held that in absence of rendition of any taxable service, the amount received as consideration cannot be termed as taxable service for the purpose of levy of service tax thereon. It is also found that by relying upon the above judgment of Hon’ble Madras High Court, this Tribunal in the case of C.S.T. -SERVICE TAX – AHMEDABAD VERSUS INTAS PHARMACEUTICALS [2021 (6) TMI 906 - CESTAT AHMEDABAD] and M/S RAJASTHAN RAJYA VIDHYUT PRASARAN NIGAM LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, CUSTOMS AND CENTRAL EXCISE, JODHPUR I [2022 (1) TMI 909 - CESTAT NEW DELHI] has held that any compensation paid by the employee to the employer for resigning from the service without giving the requisite notice, would not be termed as consideration for the contract of employment and as such, would not fall within the preview of taxable service. There are no merits in the impugned order, insofar as it has upheld confirmation of adjudged demands on the appellants - appeal allowed - decided in favor of appellant.
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