Shriram Pistons & Rings Ltd. Vs Commissioner of Central Tax (CESTAT Allahabad)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, Allahabad Regional Bench, considered Service Tax Appeal No. 70444 of 2019 filed by M/s Shriram Pistons & Rings Ltd. against Order-in-Appeal No. GZB/EXCUS/000/APPL-MRT/507/2018-19 dated 12.02.2019 passed by the Commissioner (Appeals), Central Goods & Services Tax, Meerut. Final Order No. 70141/2020 was pronounced on 04.02.2020.
The dispute concerned service tax demanded from the appellant on an amount recovered from an employee when the employee left employment before completion of the fixed contractual term. Under the employment arrangement described in the order, the employee was paid salary for a fixed term and, if the employee left before expiry of that term, the appellant recovered a certain amount already paid as salary from the employee.
The Revenue treated the amount recovered by the employer as consideration for a taxable service and raised a service tax demand on that basis.
The Tribunal noted that the recovery represented an amount out of salary that had already been paid to the employee. It further observed that salary was not covered by the provisions of service tax.
The Tribunal also noted that the issue stood decided by the Madras High Court in GE T & D India Limited Vs Deputy Commissioner of Central Excise, 2020 (1) TMI 1096 (Mad.). The Madras High Court decision concerned the taxability of notice-pay recovery and was referred to by the Tribunal in support of its conclusion.
