Service tax on notice pay
This query is : Open
03 July 2015
I am working with a Private limited company for last one and half year. As per the terms of agreement I need to servce notice period of 90 days while I'm going to serve less than a month in actual.
Now I have to make payment for the shortfall of notice period. But the company is charging service tax @14% in addition which does not include the terms of appointment.
Is this allowable ??? If yes, under what ground ?? Any relevant section can you please mention.
Please please help.
Regards,
Shibu Pramanick.
I am working with a Private limited company for last one and half year. As per the terms of agreement I need to servce notice period of 90 days while I'm going to serve less than a month in actual.
Now I have to make payment for the shortfall of notice period. But the company is charging service tax @14% in addition which does not include the terms of appointment.
Is this allowable ??? If yes, under what ground ?? Any relevant section can you please mention.
Please please help.
Regards,
Shibu Pramanick.
03 July 2015
Not liable for service tax as no service provided against such collection.
03 July 2015
https://taxguru.in/service-tax/service-tax-applicability-short-notice-recovery.html
03 July 2015
As per Section 66E(e) of Finance Act, 1994, declared services includes-
agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
Which means when any employee leaves job without giving required notice, Notice pay is recovered from employee. On such amount, service tax has to be charged and paid by the employer. This is actually services of above para (e) of section 66 E. The same is not covered under Reverse Charge mechanism.
The ground on which service tax is being imposed is that When employee leaves without serving the notice period, Employer and employee relationship expires.
Kindly Clarify
agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act;
Which means when any employee leaves job without giving required notice, Notice pay is recovered from employee. On such amount, service tax has to be charged and paid by the employer. This is actually services of above para (e) of section 66 E. The same is not covered under Reverse Charge mechanism.
The ground on which service tax is being imposed is that When employee leaves without serving the notice period, Employer and employee relationship expires.
Kindly Clarify
03 July 2015
i think service tax liability may arise on this ground, as there is an obligation to do an act which is not done by you.
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03 July 2015
There must be a concrete answer. To pay or not to pay.
Since the applicaility of service tax is not there in agreement, why shall I pay such amount.
Expert from E&Y opines that S.T is appicable while PWC is of different view.
Can somebody please suggest whether to pay or not.
I want a ground to prove this point invalid since I do not wish to pay out of my pocket.
Since the applicaility of service tax is not there in agreement, why shall I pay such amount.
Expert from E&Y opines that S.T is appicable while PWC is of different view.
Can somebody please suggest whether to pay or not.
I want a ground to prove this point invalid since I do not wish to pay out of my pocket.
03 July 2015
In my opinion, your case is covered under this section 66E i.e. declared service. there is an obligation on you to perform an act but you didn't.
03 July 2015
It is not covered under section 66E i.e. declared service. It is in the nature penalty for which no service tax payable as per CBEC order.
03 July 2015
Thank you neelam. Can you pls mention category of this service...??
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