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GST cannot be collected on a penalty imposed on an employee for...
Employee stock-shortage penalties do not constitute consideration for services, preventing GST collection under Schedule II in employment relationships.
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GST cannot be collected on a penalty imposed on an employee for stock shortage merely because an employment relationship exists. Paragraph 5(e) of Schedule II to the CGST Act applies to agreements connected with a supply of services. A stock-shortage penalty arising from the employer-employee relationship is not, without more, consideration for a supply of services. Accordingly, that provision does not authorise GST on such recovery. The de novo enquiry concerning the collection was sustained, while the intra-court appeal was dismissed.
GST cannot be collected on a penalty imposed on an employee for stock shortage merely because an employment relationship exists. Paragraph 5(e) of Schedule II to the CGST Act applies to agreements connected with a supply of services. A stock-shortage penalty arising from the employer-employee relationship is not, without more, consideration for a supply of services. Accordingly, that provision does not authorise GST on such recovery. The de novo enquiry concerning the collection was sustained, while the intra-court appeal was dismissed.
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