Employment relationship excludes GST where bank agents are controlled employees, not independent service providers.

Pervasive control, economic dependence, disciplinary oversight, deposit requirements and regulated termination showed that pigmy agents functioned as employees of the bank rather than independent service providers. On that basis, services rendered in the course of employment fell within Section 7(2)(a) read with Schedule III of the CGST Act and were outside GST, so a tax demand treating the agents as business facilitators could not stand. The bank's characterisation of the arrangement as an intermediary or correspondent model was rejected, because the actual role was confined to deposit collection under the bank's scheme. The show cause notices founded on GST liability were therefore unsustainable.

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Issues: Whether the petitioner was liable to discharge Goods and Services Tax on the services rendered and commission paid to its pigmy agents.

Analysis: The determinative question was whether the pigmy agents were independent service providers or employees of the bank. Applying the settled control and economic dependence tests, the engagement terms showed pervasive bank control over work, remuneration, security deposit, disciplinary oversight, notice requirements, and regulated termination. The arrangement bore the incidents of employment and not an independent contract for service. Once that conclusion was reached, the statutory exemption under Section 7(2)(a) and Schedule III of the CGST Act operated, because services rendered by an employee to the employer in the course of employment are neither a supply of goods nor a supply of services. The attempt to characterise the pigmy agents as business facilitators or correspondents was rejected as a misdescription, since their role was confined to deposit collection under the bank's scheme and did not answer the RBI-regulated intermediary model. On that footing, the show cause notices founded on GST liability failed for want of jurisdiction.

Conclusion: The petitioner was not liable to pay GST on the services rendered and commission paid to the pigmy agents, and the impugned show cause notices were liable to be quashed.

Ratio Decidendi: Where the factual indicators establish an employer-employee relationship, services rendered in the course of that employment fall outside the scope of GST under Schedule III, and a contrary tax demand founded on treating such employees as business facilitators cannot stand.

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