Employee stock-shortage penalties do not constitute consideration for services, preventing GST collection under Schedule II in employment relationships.

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....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.....