MADRAS HIGH COURT HOLDS THAT NO SERVICE TAX IS LEVIABLE ON NOTICE PAY

In a land-mark judgment, the Hon’ble High Court of Madras has held that, no service tax is leviable on the notice pay recovered by the employer from the employee, holding further that, the employer cannot be treated as rendering a service to the employee, in respect of notice pay recovery. A copy of this judgment is attached.

Our views :

In our view, this judgment will also have applicability under the GST law and a view can indeed be taken that, the employer cannot be treated as a ‘supplier’ within the meaning of Section 7(1) of the CGST Act, 2017.

This issue has seen a lot of litigation under the service tax regime. Even under the GST regime, this issue is promising to be an issue which will involve litigation. Assessees would be well advised to use this judgment to handle this issue.

For Judgment copy pls click on the attachment

https://bit.ly/2vryODE