Unpaid salary or notice pay recovery Out of Service Tax Purview: CESTAT Mumbai

Kellogg India Pvt. Ltd Vs Commissioner of CGST & CE (CESTAT Mumbai) Introduction: In a landmark ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Mumbai has annulled a service tax demand against Kellogg India Pvt. Ltd. The Tribunal confirmed that salary, including notice pay recovery, falls outside the purview of service tax. The dispute arose when the tax authorities treated recovered amounts from employees leaving without the stipulated notice as a “declared service” subject to service tax. Analysis: The case revolved around an agreement between Kellogg ...