Madras HC: No service tax on payment received from employees for Notice Period

Last updated: 08 February 2020

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The Madras High Court has ruled that service tax is not applicable to payments made by employees who opt to pay in lieu of serving their notice period. The court found that the employer does not provide a 'service' in such cases, but merely facilitates the employee's exit upon receiving compensation. This decision aligns with guidance notes and considers the definitions of 'service' and 'declared services' under relevant finance acts.

Court :
Madras High Court

Brief :
The Hon’ble HC, Madras in the matter of GE T & D India Limited v. Deputy Commissioner of Central Excise [W.P. Nos. 35728 to 35734 of 2016 and WMP. Nos. 30704 to 30710 of 2016 dated November 7, 2019] held that service tax is not leviable on the payment received by the Petitioner in lieu of notice period paid by the outgoing employees.

Citation :
GE T & D India Limited v. Deputy Commissioner of Central Excise [W.P. Nos. 35728 to 35734 of 2016 and WMP. Nos. 30704 to 30710 of 2016 dated November 7, 2019]

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