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2024 (5) TMI 368 - CESTAT NEW DELHILevy of service tax - notice period recovery - Declared Service or not - Department was of the opinion that the said amount is towards agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act - HELD THAT:- The employer cannot be said to have rendered any service per se much less taxable service and has merely facilitated the exit of the employee upon imposition of cost upon him for the sudden exit. Definition in clause (e) of Section 66E is not attracted to the scenario at hand. The employer has not 'tolerated' any act of the employee but has permitted a sudden exit upon being compensated by the employee in this regard in form of Notice pay, in lieu of sudden termination. In any case this act however, does not give rise to the rendition of service either by the employer or employee. The decision relied upon by the appellant the Principal Bench in M/S RAJASTHAN RAJYA VIDHYUT PRASARAN NIGAM LTD. VERSUS COMMISSIONER OF CENTRAL GOODS AND SERVICES TAX, CUSTOMS AND CENTRAL EXCISE, JODHPUR I [2022 (1) TMI 909 - CESTAT NEW DELHI] is perused wherein it has been held 'compensation for failure under a cannot is NOT consideration for service under the contract and also following the law laid down by Madras High Court in GE T & D INDIA LIMITED (FORMERLY ALSTOM T & D INDIA LIMITED) VERSUS DEPUTY COMMISSIONER OF CENTRAL EXCISE [2020 (1) TMI 1096 - MADRAS HIGH COURT] that Notice pay, in lieu of termination, however, does not give rise to the rendition of service either by the employer or the employee, the impugned order upholding confirmation of a demand of service tax on the notice pay received/recovered by the appellant from its employees for premature resignation cannot be sustained and needs to be set aside.' The amount from employee received by appellant, the employer, in lieu of notice period is wrongly held to be an amount towards rendering the Declared Service - the order under challenge is hereby set aside - Appeal allowed.
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