TaxTMI 
TaxTMI 
2026 (4) TMI 430
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....ployees and the dealers/distributors. Consequently, a show cause notice dated 27.11.2018 was issued for recovery of service tax of Rs.1,42,528/-. The said demand was confirmed by the adjudicating authority vide order in original dated 26.3.2019. The appellant filed an appeal before the Commissioner (Appeals) who vide the impugned order upheld the order-in original. Aggrieved, the present appeal is before this Tribunal. 3. Learned Counsel for the appellant submitted that the issue was no more res- integra as such forfeited amounts collected by the appellant was not consideration towards provision of any service. He relied the following decisions in this context: i. GE T and D Indian Limited versus Deputy Commissioner of Central Excise, Chennai [(2020 (35) GSTL 89(Mad)] ii. Girnar Software Pvt Ltd versus Commissioner Service Tax, Jaipur [(Final order no. 55634/2024 dated 4.4.2024)] iii. The Lalit Mumbai versus Commissioner, CGST [Final order no: 50360-50362 dated 12.2.2025.] 3.1. Learned counsel contended that the above said decisions had relied on the CBIC guidelines dated 20.6.2012 wherein it was clarified that such amounts would not be chargeable t....
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.... to have rendered any service per se much less taxable service and has merely facilitated the exit of the employee upon imposition of cost upon him for the sudden exit. Definition in clause (e) of Section 66E is not attracted to the scenario at hand. We hold that 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 in form of Notice pay, in lieu of sudden termination. In any case this act however, does not give rise to the rendition of service either by the employer or employee. 12. We have also perused the decision relied upon by the appellant the Principal Bench in Rajasthan Rajya Vidhyut Prasaran Nigam Ltd. (supra) wherein it has been held as follows:- "15. The present case deals with contracts of employment. Employment contracts are entered into with the expectation that the employer will continue to keep him employed for the period as agreed and that the employee will perform his duties diligently. They are not entered into so that the employer can remove the employer from service or so that the employee can resign and leave the service. However, often, for vario....
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....t is NOT consideration for service under the contract and also following the law laid down by Madras High Court in GE T&D that Notice pay, in lieu of termination, however, does not give rise to the rendition of service either by the employer or the employee, the impugned order upholding confirmation of a demand of service tax on the notice pay received/recovered by the appellant from its employees for premature resignation cannot be sustained and needs to be set aside." 14. We have no reason to differ from these findings. Keeping in view the same and the discussion above, we hold that the findings of Additional Commissioner are contrary thereto and rather are presumptive in nature. We hereby hold that Order-in-Original is not sustainable. The amount from employee received by appellant, the employer, in lieu of notice period is wrongly held to be an amount towards rendering the Declared Service. Resultantly, the order under challenge is hereby set aside and consequent thereto the appeal stands allowed." 6.1 Consequently we hold that the demand of service tax on such amounts cannot be sustained. 7. We now consider the issue relating the amounts recovered because of non....
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....t, or to tolerate an act or a situation, or to do an act. There has, therefore, to be a flow of consideration from one person to another when one person agrees to the obligation to refrain from an act, or to tolerate an act, or a situation, or to do an act. In other words, the agreement should not only specify the activity to be carried out by a person for another person but should specify the : (i) consideration for agreeing to the obligation to refrain from an act; or (ii) consideration for agreeing to tolerate an act or a situation; or (iii) consideration to do an act. 26. Thus, a service conceived in an agreement where one person, for a consideration, agrees to an obligation to refrain from an act, would be a 'declared service' under Section 66E(e) read with Section 65B(44) and would be taxable under Section 68 at the rate specified in Section 66B. Likewise, there can be services conceived in agreements in relation to the other two activities referred to in Section 66E(e). 27. It is trite that an agreement has to be read as a whole so as to gather the intention of the parties. The intention of the appellant and the parties was for su....